New Delhi: The Union Cabinet on Wednesday approved a 3 percent increase in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners, a timely boost ahead of Dussehra and Diwali. The revision raises DA from 55 percent to 58 percent of basic pay and pension, effective retrospectively from July 1, 2025. Arrears for July, August, and September will be credited along with the October salary.
Impact on beneficiaries
The hike is expected to benefit around 48 lakh central government employees and 68 lakh pensioners, a total of 1.16 crore people.
For instance, an employee with a basic pay of Rs 30,000 will get an additional Rs 900 per month, while someone earning Rs 40,000 will receive Rs 1,200 extra. Over three months, arrears will range between Rs 2,700 and Rs 3,600, providing additional spending power ahead of the festive season.
Why DA is revised
Dearness Allowance for employees and Dearness Relief for pensioners are revised twice a year, in January and July, to offset inflation. The revision is linked to the All India Consumer Price Index for Industrial Workers (CPI-IW), which reflects changes in the cost of living.
While the revisions are calculated in January and July, official announcements often come later, with arrears paid retroactively to bridge the gap.
Last hike under 7th Pay Commission
This 3 percent increase is expected to be the final DA revision under the 7th Pay Commission. The 8th Pay Commission is likely to be implemented from January 2026, signalling a broader overhaul of salaries and pensions for central government employees in the coming year.