Union Cabinet Clears 2pc DA Hike For Central Govt Staff, Pensioners

The crucial decision to provide relief to the employees and pensioners of Central government was taken at a cabinet meeting chaired by Prime Minister Narendra Modi today.

The decision brings temporary respite to employees, it was taken against the backdrop of rising demands by employee unions for a complete revamp of the salary structure. The DA has been increased from 58% to 60% of the basic pay.  

Over the past few weeks several employees unions, including the National Council-Joint Consultative Machinery (NC-JCM) have submitted a memorandum calling immediate relief to employees till the 8th Central Pay Commission makes its recommendations. 

Several Central government employees' associations, including the Federation of National Postal Organisations (FNPO) and the Confederation of Central Government Employees and Workers, have earlier submitted petitions to Justice Ranjana Prakash Desai, Chairperson, 8th Central Pay Commission (CPC), seeking the merger of 50% dearness allowance (DA)/dearness relief (DR) with the basic pay and pension as an interim relief from 1 January, 2026.

The Beneficiaries' 

There are an estimated 7.5 million Central government employees in the country, which includes defence personnel, the Railways, and public sector undertakings (PSUs). Moreover, about 69 lakh pensioners in the country are eagerly awaiting the 8th CPC’s recommendations.

Although the government has approved the Terms of Reference (ToR) for the 8th CPC, its recommendations are yet to be submitted.

In November last year, the government asked the 8th CPC to submit its recommendation report within 18 months. Due to this delay, employees' bodies wanted the government to merge the Dearness Allowance (DA) with the basic pay.

What Is DA

DA/DR is given to government employees and pensioners to neutralise the impact of price rise, based on the All India Consumer Price Index Industrial Workers (AICPI-IW). The government revises the DA twice a year, in July and January.

The Central and State governments pay DA to their employees as a cost-of-living adjustment to offset the impact of inflation. The amount of DA is calculated on the basis of the average of the AICPI readings.

The DA of employees is revised by the Central government twice every year. Employees get DA as a percentage of their basic salary. The current DA stands at 58%. If the DA is merged with the basic pay, a new basic pay is formed.