New Delhi: The Union government has approved a 3 percentage point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, raising the rates from 60% to 63% of basic pay or pension with effect from July 1, 2026.

Union Minister Ashwini Vaishnaw announced the decision on Wednesday, October 28, following a meeting of the Union Cabinet. The revision is expected to benefit around 48 lakh central government employees and 68 lakh pensioners.

The increase is intended to provide relief against rising prices by adjusting the allowances paid to serving employees and pensioners. The government will incur an additional annual expenditure of Rs 10,016 crore due to the combined revision of DA and DR.

DA and DR increased from 60% to 63%

Dearness Allowance is paid to serving central government employees, while Dearness Relief is provided to pensioners. Both are revised periodically to help offset the impact of inflation on household expenses.

Under the latest decision, the DA rate for eligible central government employees will rise from 60% to 63% of basic pay. Pensioners will receive a corresponding increase in DR, from 60% to 63% of their basic pension.

Although the announcement was made on October 28, the revised rates will take effect retrospectively from July 1, 2026. Eligible beneficiaries will therefore be entitled to the increased allowance from that date, subject to the applicable government orders and payment arrangements.

The revision covers a large section of the central government workforce and pensioner community. The additional expenditure reflects the cost of extending the higher rates to both serving employees and retired personnel.

Revised rates under 5th and 6th Pay Commissions

The Cabinet decision also provides for changes in DA rates for employees whose salaries continue to be governed by the 5th and 6th Central Pay Commission pay scales.

The revised rates are as follows:

  • Current central government pay structure: DA increases from 60% to 63% of basic pay.
  • 6th Central Pay Commission: DA rises from 262% to 269% of basic pay, an increase of seven percentage points.
  • 5th Central Pay Commission: DA rises from 483% to 497% of basic pay, an increase of 14 percentage points.

The revised rates for the 5th and 6th Pay Commission categories will also be effective from July 1, 2026.

The different percentage increases reflect the separate DA structures applicable to the respective pay commission scales. The figures should not be compared directly with the 3 percentage point increase under the current pay structure, as the underlying rate calculations differ.

Additional annual expenditure of Rs 10,016 crore

According to Vaishnaw, the combined annual financial implication of the DA and DR revision will be Rs 10,016 crore.

The government estimates that approximately 48 lakh employees and 68 lakh pensioners will benefit, taking the total number of beneficiaries to around 1.16 crore.

The allowance revision is intended to help employees and pensioners manage increases in the cost of living. Since the new rates apply from July 1, eligible beneficiaries may also receive arrears for the period between the effective date and the implementation of the revised rates, according to the applicable payment process.

The announcement is part of the government’s periodic adjustment of DA and DR. The rates are reviewed to account for changes in prices and provide financial support to employees and pensioners.

Cabinet approves other schemes

The Union Cabinet also approved funding and initiatives in other areas, according to the announcement.

These include an allocation of Rs 7,395 crore for the PM Viksit Gram Swaraj Yojana. The Cabinet also approved a Rs 10,000 crore container manufacturing promotion scheme and the Khelo India Sports Goods and Manufacturing Scheme, with an allocation of Rs 1,856 crore.

The initiatives cover different policy areas, including rural development, manufacturing and sports goods production.

The DA and DR hike, however, is the decision with the most direct impact on central government employees and pensioners, as it raises their inflation-linked allowances from July 1. With the revised rates, eligible beneficiaries will receive DA or DR at 63% of basic pay or pension, subject to the applicable rules.