The Union Cabinet approved a 3 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.
1. Key Financial & Operational Highlights
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Revised Rate: DA/DR hiked from 60% to 63% of basic pay/pension.
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Effective Date: Retrospective effect from July 1, 2026. Beneficiaries will receive arrears for July, August, and September alongside their October salary/pension.
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Beneficiaries: Approximately 48 lakh central government employees and 68 lakh pensioners.
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Exchequer Impact: The decision incurs a combined annual financial implication of ₹10,016 crore on the central exchequer.
2. Calculation Methodology & Historical Trajectory
The revision follows the accepted formula recommended under the 7th Central Pay Commission, based on the 12-month average of the All-India Consumer Price Index for Industrial Workers (AICPI-IW) published by the Labour Bureau.
DA Trajectory (July 2023 – July 2026)
| Effective Date | DA Rate (% of Basic Pay) | Periodical Hike |
| July 1, 2023 | 46% | +4% |
| January 1, 2024 | 50% | +4% |
| July 1, 2024 | 53% | +3% |
| January 1, 2025 | 55% | +2% |
| July 1, 2025 | 58% | +3% |
| January 1, 2026 | 60% | +2% |
| July 1, 2026 | 63% | +3% |
