Union Cabinet Announces 3% DA, DR To Employees, Pensioners

The announcement was made following the meeting of the Union Cabinet, chaired by Prime Minister Narendra Modi. Union Minister Ashwini Vaishnaw said that it would provide the desired relief to employees and pensioners ahead of Dussehra (on Thursday) and Diwali later this month.

The Minister said that the increase in the DA and DR would be effective from July 1. It would cost the government exchequer to the tune of nearly Rs 10,000 crore.

This is the second hike this year: in March, a two per cent increase was announced, taking DA payouts from 53 per cent of the basic pay to 55 per cent. That was after a three per cent hike in October last year.

DA and DR are given to employees and pensioners to insulate them from the impact of inflation.

The current hike in the DA will mean that if an employee has a basic salary of Rs. 60,000, he /she will receive an additional amount of Rs. 34,800 as DA, up from Rs. 33,000 they were receiving earlier.

The employees have been waiting for the 8th Central Pay Commission (CPC) notification concerning its members and Terms of Reference, which the government had promised in January this year. 

However, experts are of the view that there will be a fitment factor to the tune of between 1.83 and 2.86, which could mean a hike of roughly 13 to 34 per cent. However, the DA - 55 per cent for now - will likely be reset to zero and merged with the basic pay after the CPC recommendations are implemented from January 1, 2026.

There could be a moderation in the increase due to the merger. The 7th Pay Commission had reviewed nearly 200 allowances, abolishing 52 and merging others to make the salary structure transparent and less complex.