Announcing the decision of the Union Cabinet, which was chaired by Prime Minister Narendra Modi, Information and Broadcasting Minister Ashwini Vaishnaw said, “Approval has been granted for a 3 percentage point increase in the DA for over 48 lakh Central government employees and the DR for over 68 lakh pensioners, raising the rates from 60% to 63% of their basic pay or pension with effect from 1 July 2026.”

The decision, announced ahead of Diwali, is aimed at cushioning government employees and pensioners against rising prices. The revision will benefit approximately 1.17 crore people, including 48.54 lakh Central government employees and 68.71 lakh pensioners, according to an official statement issued by the government after the Union Cabinet meeting.

The government estimates that the increase in DA and DR will entail an additional annual expenditure of ₹10,016.10 crore on the exchequer.

7th CPC Formula

The latest revision follows the formula based on the recommendations of the Seventh Central Pay Commission (7th CPC), which guides periodic adjustments in DA and DR to help employees and pensioners maintain their purchasing power amid inflation.

Dearness Allowance is paid to serving government employees, while Dearness Relief is provided to pensioners. Both are revised periodically to offset the impact of price rises on household budgets.

With the latest 3 percentage-point increase, employees and pensioners will receive higher payments calculated on their respective basic pay or pension, with the revised rates applicable retrospectively from 1 July 2026.

The move is expected to provide additional financial relief to beneficiaries ahead of the festive season, as the government continues to adjust allowances in line with its established inflation-linked mechanism.