The Centre has approved a 3 per cent hike in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners ahead of Diwali. Union minister Ashwini Vaishnaw announced the decision on Wednesday, confirming that the revised rates will take effect retrospectively from July 1, 2026.
With the latest revision, DA and DR will increase from 60 per cent to 63 per cent of basic pay or pension, providing additional financial support to serving employees and retired personnel.
Over 1 crore employees and pensioners to benefit
The increase is expected to benefit around 48 lakh central government employees and 68 lakh pensioners, taking the total number of beneficiaries to approximately 1.16 crore.
According to Vaishnaw, the revision will have a combined annual financial implication of Rs 10,016 crore for the government exchequer. The allowance adjustment is intended to help employees and pensioners manage the impact of rising prices.
Since the hike is effective from July 1, 2026, eligible beneficiaries will receive the revised allowance from that date, subject to the applicable government payment arrangements.
DA rates revised for 5th and 6th Pay Commission employees
The Cabinet decision also covers employees drawing salaries under the 5th and 6th Central Pay Commission pay scales.
For employees under the 6th Pay Commission, DA will rise from 262 per cent to 269 per cent of basic pay, marking an increase of seven percentage points.
For those covered by the 5th Pay Commission, the allowance will increase from 483 per cent to 497 per cent of basic pay, a rise of 14 percentage points. These revised rates will also come into effect from July 1, 2026.
Cabinet clears other proposals
Apart from the DA and DR hike, the government approved an allocation of Rs 7,395 crore for the PM Viksit Gram Swaraj Yojana.
The Cabinet also cleared a container manufacturing promotion scheme with an outlay of Rs 10,000 crore. Additionally, the Khelo India Sports Goods and Manufacturing scheme, worth Rs 1,856 crore, was among the proposals approved.
The decisions cover employee benefits as well as initiatives related to rural development, manufacturing and sports goods production.