New Delhi: The Union Cabinet on Saturday approved a 2 per cent increase in Dearness Allowance for central government employees. The decision raises the allowance from 58 per cent to 60 per cent, according to an official Cabinet release.
The same increase applies to Dearness Relief for pensioners, which will also rise from 58 per cent to 60 per cent. The revision comes after a wait for a change in compensation linked to inflation.
Impact on employees and pensioners
The hike will benefit around 49.19 lakh central government employees and 68.72 lakh pensioners. Since the revised rate will be effective from January 1 this year, both groups will receive arrears for the past months.
The government has estimated the annual financial burden of the increase at Rs 6,791 crore. This cost will be borne by the central exchequer.
What is dearness allowance
Dearness Allowance is a cost of living adjustment paid to government employees and pensioners. It helps offset the impact of rising prices on fixed incomes. The allowance is calculated as a percentage of basic pay or pension.
The rate is revised periodically to maintain purchasing power. It depends on inflation trends measured through the Consumer Price Index for Industrial Workers, which the Labour Bureau releases every month.
How often DA is revised
The government revises Dearness Allowance twice every year. These revisions usually take effect from January and July. The aim is to keep salaries in line with inflation changes.
In the previous revision, the Union Cabinet led by Prime Minister Narendra Modi approved a 3 per cent increase in October 2025. That decision raised the rate from 55 per cent to 58 per cent, with effect from July 1, 2025. The annual cost of that hike stood at Rs 10,083.96 crore, as per the Cabinet release.
The latest increase continues this pattern of periodic revisions linked to inflation.