Over 1.17 crore employees and pensioners to benefit from DA hike

The Union Cabinet approved a 3-percentage-point hike in Dearness Allowance for Central Government employees and Dearness Relief for pensioners, effective July 1, 2026. The increase will benefit 48.54 lakh employees and 68.71 lakh pensioners, costing Rs 10,016.10 crore annually

New Delhi: In a relief for millions amid the ongoing festive season, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved an additional instalment of Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners.

The combined annual impact of the increase in Dearness Allowance and Dearness Relief on the exchequer would be Rs 10,016.10 crore.

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The decision will benefit about 48.54 lakh Central Government employees and 68.71 lakh pensioners, according to a Cabinet statement.

The increase will come into effect from July 1, 2026, and represents a hike of 3 percentage points over the existing DA and DR rates of 60 per cent of basic pay or pension, respectively, to compensate for rising prices.

The Cabinet said the increase was in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission.

Meanwhile, the 8th Central Pay Commission is holding consultations on pay- and pension-related matters. The discussions are expected to focus on pay conditions and submissions from stakeholders.

The 8th Central Pay Commission is headed by former Supreme Court judge Ranjana Prakash Desai. Its members include Pankaj Jain, a former IAS officer serving as Member-Secretary, and Pulak Ghosh, a tenured professor of finance and a member of the Economic Advisory Council to the Prime Minister.

Feedback gathered during these consultations will form part of the inputs considered while framing the commission’s recommendations. Its work could affect the financial interests of more than one crore employees and pensioners.

This population includes around 50 lakh Central Government employees and about 65 lakh pensioners, including defence and railway personnel and retirees. Employee representatives are seeking a higher fitment factor, which would raise the base used to calculate salaries under the next pay revision.

Unions are also calling for changes to the Dearness Allowance framework, including more frequent revisions and a possible merger with basic pay once a specified threshold is reached.