Cabinet raises DA and DR by 3 points to 63% for central government staff and pensioners

The Union Cabinet on Wednesday approved a three-percentage-point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, lifting both from 60% to 63% of basic pay and pension.

The revised rate applies retrospectively from July 1, 2026, which means eligible employees and pensioners will receive arrears for the months since then. Union minister Ashwini Vaishnaw announced the decision after the Cabinet meeting.

Who benefits

According to the government, the hike covers about 48.5 lakh serving central government employees and about 68.7 lakh pensioners, or roughly 1.17 crore people in all. The combined additional burden on the exchequer from the DA and DR revision is estimated at about Rs 10,016 crore a year.

The government said the increase follows the accepted formula based on the recommendations of the 7th Central Pay Commission, which links the allowance to retail price trends. Employees and pensioners covered under older pay commission structures will see corresponding revisions to their own rates.

Timing ahead of the festive season

DA and DR are normally revised twice a year, with effect from January and July. The previous revision earlier this year raised the rate by two points to 60%. The latest increase comes a little over a week before Diwali, and the arrears and higher monthly payouts are expected to add to household spending during the festive season.

The allowance is meant to offset the impact of rising prices on salaries and pensions. Inflation pressures have stayed in focus this year as global crude oil prices have climbed sharply on supply worries in West Asia.

Why it matters

For central government households, the revision means a modest rise in take-home pay plus a lump sum of arrears for July onwards. Many state governments also tend to follow the Centre's DA decisions for their own employees in the weeks that follow, so the impact could extend well beyond central staff.