The Union Cabinet on Saturday approved a 2 per cent increase in Dearness Allowance (DA) for central government employees. The decision, finalised during a Cabinet meeting, raises the allowance from 58 per cent to 60 per cent.
The adjustment addresses the long-standing wait by the workforce for a revision to their compensation structure. The 2 per cent hike also applies to Dearness Relief (DR) for pensioners, which similarly increases from 58 per cent to 60 per cent.
According to a cabinet release, the hike will be applicable from January 1 of this year, meaning central government employees and pensioners will be in for some arrear pay. The government has earmarked an additional Rs. 6,791 crore in annual hits due to this decision.
The hike, aimed at offsetting the impact of inflation, was sought to benefit approximately 49.19 lakh central government employees and 68.72 lakh pensioners.
What is the Dearness Allowance?
The Dearness Allowance is a fundamental cost-of-living adjustment designed to support government employees and pensioners. It specifically offsets the impact of inflation on fixed incomes. The allowance is calculated as a percentage of the basic pay and undergoes periodic revisions based on established inflation indices to maintain the purchasing power of the workforce.
The allowance, linked to inflation, is revised twice a year, typically in January and July. It is worked out based on the Consumer Price Index for Industrial Workers (CPI-IW), released monthly by the Labour Bureau under the Labour Ministry.
When was the DA hiked last time?
{{/usCountry}}The allowance, linked to inflation, is revised twice a year, typically in January and July. It is worked out based on the Consumer Price Index for Industrial Workers (CPI-IW), released monthly by the Labour Bureau under the Labour Ministry.
When was the DA hiked last time?
{{/usCountry}}The Union Cabinet, chaired by Prime Minister Narendra Modi, had last approved a 3 per cent increase in Dearness Allowance for Central Government employees and Dearness Relief for pensioners in October 2025, with the decision going into a backdated effect from July 1, 2025.
The decision raised the then-existing rate from 55 per cent to 58 per cent of the basic pay or pension, according to a Cabinet release. The total financial implication of the decision on the exchequer was estimated at ₹10,083.96 crore annually.