Cabinet okays 3% DA, DR hike for central employees and pensioners from July 1, 2026
New Delhi, October 28, 2026: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved a 3 per cent increase in Dearness Allowance (DA) for central government employees and an equivalent rise in Dearness Relief (DR) for pensioners, with effect from July 1, 2026.
The revision raises the DA and DR rates from 60 per cent to 63 per cent of basic pay and pension, respectively. Information and Broadcasting Minister Ashwini Vaishnaw announced the decision after the Cabinet meeting and described it as a “Diwali gift from Prime Minister Narendra Modi” to central government employees and pensioners.
According to the government, the increase is meant to offset rising prices ahead of the festive season. The move will benefit about 48.54 lakh central government employees and 68.71 lakh pensioners, taking the total number of beneficiaries to more than 1.17 crore.
The annual financial impact of the decision has been estimated at Rs 10,016.10 crore. Because the hike is effective from July 1, 2026, eligible employees and pensioners will also receive arrears for the months between July and the implementation of the revised payment cycle, which are expected to be credited with forthcoming salary or pension disbursements.
The revision is based on the accepted formula linked to the recommendations of the Seventh Central Pay Commission and the movement of the All India Consumer Price Index for Industrial Workers (AICPI-IW). The previous revision had increased DA and DR to 60 per cent with effect from January 1, 2026.
The Cabinet also approved corresponding increases for employees and pensioners who continue under earlier pay commission structures. Under the Sixth Central Pay Commission scales, DA and DR will go up by 7 percentage points, from 262 per cent to 269 per cent of basic pay or pension. Under the Fifth Central Pay Commission scales, the rates will rise by 14 percentage points, from 483 per cent to 497 per cent, from the same date.
In practical terms, the 3 per cent increase will translate into a monthly rise equivalent to 3 per cent of basic pay. For example, an employee with a basic pay of Rs 18,000 will receive an additional Rs 540 a month, while a pensioner drawing a basic pension of Rs 20,000 will get an extra Rs 600 as Dearness Relief.
The revised rates will remain applicable for the July–December 2026 period until the next scheduled revision. The decision is part of the government’s regular inflation-linked adjustment of allowances aimed at protecting the purchasing power of serving employees and pensioners.
The announcement comes just days before Diwali, which is expected to be celebrated on November 8 this year.
