Hike to Benefit Over 48 Lakh Employees and 68 Lakh Pensioners

The Union government on Wednesday announced a three-percentage-point increase in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners, raising the rate from 60% to 63% of basic pay and pension, respectively.

According to an official statement, the revised rates will come into effect retrospectively from July 1, 2026, providing financial relief to employees and pensioners ahead of Diwali. The decision is expected to benefit approximately 48.54 lakh central government employees and 68.71 lakh pensioners.

The government estimates that the increase will result in an additional annual expenditure of Rs 10,016.10 crore for the exchequer. The revision follows the formula based on the recommendations of the 7th Central Pay Commission.

DA Revision Linked to Inflation and Consumer Price Index

Dearness allowance is a component of government employees’ salaries designed to offset the impact of inflation and rising living costs. Dearness relief serves a similar purpose for pensioners. Both are generally revised twice a year to help maintain purchasing power as prices increase.

The government calculates DA and DR using the Consumer Price Index for Industrial Workers (CPI-IW), released monthly by the Labour Bureau. The revisions reflect changes in the cost of living, as measured through the index.

The previous revision was announced on April 18, 2026, when the government raised DA by two percentage points, from 58% to 60%, effective retrospectively from January 1, 2026. The increase was based on changes in the 12-month average of the All India Consumer Price Index.

Before that, DA was increased by three percentage points in October 2025, taking the rate from 55% to 58%, effective from July 1, 2025.

The latest revision is expected to provide additional financial support to government employees and pensioners amid rising household expenses.