Money

Dearness Allowance Hiked to 63%: What It Means for Your Pay

The Cabinet approved a 3% Dearness Allowance hike for central government staff and pensioners just before Diwali. Here is what changed and who gains.

PreMinuteNov 2, 2026 · 4 min read
Dearness Allowance Hiked to 63%: What It Means for Your Pay

On 28 October 2026, the Union Cabinet approved a 3 percentage point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, raising the rate from 60% to 63% of basic pay or pension. The decision was announced days ahead of Diwali and takes effect retrospectively from 1 July 2026.

The change affects about 48.54 lakh central government employees and 68.71 lakh pensioners, and is expected to cost the exchequer roughly ₹10,016 crore a year, according to the government's own announcement.

What DA and DR actually are

Dearness Allowance is a part of a government employee's salary meant to offset the rising cost of living. Dearness Relief is the equivalent top-up paid to pensioners. Both are calculated as a percentage of basic pay (or basic pension) and are revised twice a year, usually in January and July, based on retail inflation trends among industrial workers.

The 7th Central Pay Commission's accepted formula is used to work out each revision, so the exact figure is not a political decision taken in isolation; it follows from inflation data collected over the preceding months.

Who benefits and by how much

The actual rupee amount depends on an employee's basic pay, since DA is a percentage of that figure, not a flat sum. A higher basic pay means a higher DA amount for the same percentage increase.

What most people miss

Sources

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