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 a corresponding hike in Dearness Relief (DR) for pensioners. The revision raises the DA and DR rates from 60 per cent to 63 per cent of basic pay and pension, respectively, with retrospective effect from July 1, 2026.
Information and Broadcasting Minister Ashwini Vaishnaw announced the decision after the Cabinet meeting, describing it as a “Diwali gift from Prime Minister Narendra Modi” to central government employees and pensioners. He stated that the increase is intended to compensate against the rise in prices ahead of the festive season.
The decision will benefit approximately 48.54 lakh central government employees and 68.71 lakh pensioners, taking the total number of beneficiaries to over 1.17 crore. The combined annual financial implication on the exchequer is estimated at Rs 10,016.10 crore. Since the hike is effective from July 1, 2026, eligible employees and pensioners will also receive arrears for the intervening months, expected to be disbursed with forthcoming salary or pension payments.
The revision follows the accepted formula based on the recommendations of the Seventh Central Pay Commission and is linked to movements in the All India Consumer Price Index for Industrial Workers (AICPI-IW). The previous instalment had raised DA and DR to 60 per cent with effect from January 1, 2026.
For employees and pensioners continuing under earlier pay structures, corresponding increases have also been approved. Under the Sixth Central Pay Commission scales, DA and DR will rise 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 increase by 14 percentage points, from 483 per cent to 497 per cent, effective from the same date.
The hike will translate into a monthly increase equivalent to 3 per cent of basic pay. For instance, an employee with a basic pay of Rs 18,000 will receive an additional Rs 540 per month, while a pensioner drawing a basic pension of Rs 20,000 will get an additional Rs 600 per month as Dearness Relief. The revised rates will remain applicable for the July–December 2026 period until the next scheduled revision.
The Cabinet’s decision forms part of the government’s periodic adjustment of inflation-linked allowances to protect the purchasing power of serving employees and pensioners. The announcement comes days ahead of Diwali, which is expected to be celebrated on November 8 this year.
