Cabinet Approves 3% DA Hike for Central Government Employees, Pensioners

The Union Cabinet on Wednesday approved a 3 percentage point increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners, effective from 1 July 2026. The decision aims to help them cope with rising prices.

With the latest increase, DA and DR rates will rise from 60% to 63% of basic pay and pension, respectively.

The decision is expected to benefit around 48.54 lakh Central Government employees and 68.71 lakh pensioners across the country.

According to the government, the increase will have a combined annual financial impact of Rs 10,016.10 crore on the government exchequer.

The additional instalment of DA and DR has been approved under the accepted formula based on the recommendations of the 7th Central Pay Commission.

Dearness Allowance is paid to serving government employees to help them manage the rising cost of living. Dearness Relief provides similar support to pensioners by helping them deal with inflation.

As the revision is effective retrospectively from 1 July 2026, eligible employees and pensioners will receive the revised benefits from that date.

The latest decision is part of the government’s periodic revisions to inflation-linked allowances to help protect the purchasing power of Central Government employees and pensioners.