The Union Cabinet on Saturday approved a 2% hike in Dearness Allowance (DA) and Dearness Relief (DR) for Central government employees and pensioners, raising the rate to 60% of basic pay, Union Minister Ashwini Vaishnaw announced.
The revision, effective January 1, 2026, will benefit approximately 50.5 lakh employees and 68.3 lakh pensioners, with an estimated annual financial impact of ₹6,791 crore.
This follows the previous increase in October 2025, when DA was raised from 55% to 58%, effective from July 1, 2025, and implemented with arrears.
The government revises DA and DR twice a year, in January and July, to cushion employees and pensioners against inflation and maintain purchasing power. DA is calculated as a percentage of basic pay to offset rising living costs.
The latest decision comes amid broader demands from employee unions under the proposed 8th Pay Commission, which has sought:
- A fitment factor of 3.83, potentially raising minimum basic pay from ₹18,000 to about ₹69,000
- Expansion of the definition of “family” to include dependent parents
- Measures to cap pay disparity, higher increments, and inflation-linked allowances
Additionally, the Cabinet is reported to have:
- Approved a Sovereign Maritime Fund with a corpus of about ₹13,000 crore to provide affordable insurance cover for Indian-flagged and India-bound vessels
- Extended the Pradhan Mantri Gram Sadak Yojana (PMGSY) till 2028, with an extra allocation of ₹3,000 crore
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