DA hike to 63%: Cabinet clears 3-point rise for 1.17 crore staff, pensioners

The Union Cabinet on Wednesday, 28 October 2026, approved a three-percentage-point rise in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners, taking both from 60 per cent to 63 per cent of basic pay and basic pension with effect from 1 July 2026. Union Minister Ashwini Vaishnaw announced the decision after the Cabinet meeting in New Delhi. According to the government, the increase will benefit about 48.54 lakh serving employees and 68.71 lakh pensioners and will cost the exchequer Rs 10,016.10 crore a year.

Dearness Allowance is the part of a government salary meant to protect pay from rising prices. It is calculated as a percentage of basic pay and revised twice a year, for January and July, using the consumer price index for industrial workers. Dearness Relief is the same adjustment for pensioners and family pensioners. Because both are percentages of the basic amount, a rise of three points lifts the monthly pay or pension of every person in the scheme, from the most junior staff to senior officers.

For a sense of scale: under the 7th Pay Commission pay matrix, the lowest basic pay for a Central Government employee is Rs 18,000 a month. A three-point rise adds Rs 540 a month at that level. On a basic pension of Rs 9,000, the minimum under the same structure, Dearness Relief goes up by Rs 270 a month. Higher basic amounts see proportionally bigger increases. The actual amount in hand also depends on allowances that are linked to DA, so individual pay slips will vary.

The decision is part of a regular cycle rather than a new policy. What it changes on the ground is the size of monthly pay and pension cheques for central staff, defence pensioners, railway employees and others paid from the Union government's accounts. Many state governments also revise the DA of their own employees after a Central decision, though they do so on their own timelines and budgets, so the Central rate is closely watched across the country.

The rise also comes while the 8th Central Pay Commission is working on a new pay structure for Central Government staff. The higher DA becomes part of the base from which any new pay revision is calculated, which is why employee groups follow each instalment closely.

How DA has moved in recent revisions

Short-term: Central employees and pensioners will see a higher monthly amount once the revised rate is applied, along with arrears for the months since July 2026. The exact month in which the arrears are paid depends on the orders issued to ministries and pension disbursing banks, so beneficiaries should check their pay slips and pension statements.

Long-term: The extra Rs 10,016.10 crore a year adds to the Union government's salary and pension bill. A higher DA base also feeds into future pay revisions, including the work of the 8th Central Pay Commission.

Who is affected: About 48.54 lakh serving Central Government employees, including staff in ministries, the railways and other central departments, and about 68.71 lakh pensioners and family pensioners. State government employees are not covered directly, but their governments often follow with their own revisions.

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