The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a 4% increase in the Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners. The hike raises the DA rate from 50% to 54% of the basic pay, effective from January 1, 2026.
The decision is based on the accepted formula, which considers the latest Consumer Price Index for Industrial Workers (CPI-IW) data. The increase is intended to offset the impact of inflation on the cost of living for government staff and retirees.
The move will benefit approximately 4.86 million central government employees and 6.8 million pensioners. The additional financial implications for the exchequer from this hike are estimated to be over Rs 12,868 crore per annum.
The revised DA and DR rates will be applied to the basic pay and pension, respectively. The arrears for the period from January to March 2026 are expected to be disbursed along with the salary for April 2026.
