Centre Announces 3 percent Dearness Allowance Hike for 4.8 Million Employees Ahead of Diwali

The Union government has approved a 3-percentage-point increase in Dearness Allowance (DA) for central government employees, raising the rate from 60% to 63% of basic pay. The decision, announced ahead of Diwali, will also benefit pensioners through a corresponding increase in Dearness Relief (DR). The revised rates will be effective from July 1, 2026, benefiting approximately 48.54 lakh central government employees and 68.71 lakh pensioners. The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the proposal on October 28.

According to the government, the combined annual financial impact of the DA and DR increases is estimated at ₹10,016.10 crore. Information and Broadcasting Minister Ashwini Vaishnaw described the decision as a festive-season gift for government employees and pensioners. The DA increase is intended to help employees manage rising living costs by adjusting their salaries in line with inflation. Since the allowance is calculated as a percentage of basic pay, the additional amount will vary depending on an employee's salary level.

For instance, an employee with a basic monthly salary of ₹40,000 will receive an additional ₹1,200 per month following the three-percentage-point increase, before applicable deductions or other adjustments. Eligible employees may also receive arrears for the period beginning July 1, depending on the implementation and payment schedule. Pensioners will receive a corresponding increase in Dearness Relief, with the rate also rising from 60% to 63% of their basic pension. The revision is expected to provide additional financial support to retired government personnel facing higher household and healthcare expenses.

Dearness Allowance and Dearness Relief are generally revised twice a year to account for changes in consumer prices. The adjustments are linked to inflation indicators, including the Consumer Price Index for Industrial Workers, and are intended to protect the purchasing power of employees and pensioners. The latest decision follows the previous DA revision announced in April 2026, when the rate was increased from 58% to 60%, effective January 1, 2026.

The latest increase is separate from any future changes to salary structures that may arise from the Eighth Central Pay Commission. Employees awaiting broader pay revisions should therefore distinguish the current DA adjustment from any future decisions on pay commission recommendations.

The revised allowance is expected to be implemented through the applicable government payroll and pension payment procedures. The exact arrears payable to individual beneficiaries will depend on their eligible basic pay or pension and the period covered. With millions of households set to benefit, the latest DA hike provides additional financial relief ahead of Diwali while adding to the government's expenditure on salaries and pensions.

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