Cabinet raises DA and DR by 3 points to 63%, effective 1 July 2026, for 1.17 crore beneficiaries

Central government employees and pensioners will draw a higher Dearness Allowance (DA) and Dearness Relief (DR) after the Union Cabinet on Wednesday, 28 October, approved a fresh instalment of 3 percentage points. The rate moves from 60% to 63% of basic pay or basic pension, and the revision counts from 1 July 2026.

The Press Information Bureau (PIB), in a release posted at 3:50 pm IST that afternoon, said the decision covers about 48.54 lakh serving employees and 68.71 lakh pensioners, or roughly 1.17 crore people together. The two instalments will together cost the exchequer an estimated Rs 10,016.10 crore every year.

Information and Broadcasting Minister Ashwini Vaishnaw, who briefed the media after the meeting, called the move a “Diwali gift”, according to PSU Watch. The official stated purpose is to offset rising prices for staff and retirees.

What it means for a monthly salary

DA is worked out only on basic pay, so every additional percentage point is worth one per cent of the basic, and the gain rises with seniority. Some illustrations, based on figures reported by PSU Watch and Indian Pay Calculator and checked by our desk:

• Level 1 entry pay (Rs 18,000 basic): DA goes from Rs 10,800 to Rs 11,340, an increase of Rs 540 a month.
• Level 10 entry pay (Rs 56,100 basic): DA goes from Rs 33,660 to Rs 35,343, an increase of Rs 1,683 a month.
• Rs 50,000 basic: Rs 1,500 more every month.
• Pensioner with Rs 25,000 basic pension: DR rises by Rs 750 a month.

Because the new rate is retrospective from 1 July, the difference for the intervening months is payable as arrears. On our arithmetic, a Level 1 employee would be owed Rs 2,160 if four months (July to October) are settled together; at Level 10 the figure would be Rs 6,732. Reports opened by The Daily Rostrum did not state when the Department of Expenditure will issue its implementing order or in which month arrears will be credited.

How the rate is fixed

The government revises DA and DR twice a year, with effect from 1 January and 1 July, using a formula accepted from the Seventh Central Pay Commission’s recommendations and linked to movement in consumer prices. The previous instalment, approved on 18 April 2026, took the rate from 58% to 60% from 1 January 2026. That 2-point increase was costed at Rs 6,791.24 crore a year and, according to the government’s release at the time, applied to about 50.46 lakh employees and 68.27 lakh pensioners. The October release counts fewer serving employees; neither release explains the change.

Business Today reported that staff still drawing pay in older scales will see larger percentage changes: DA under Sixth Pay Commission scales moves from 262% to 269%, and under Fifth Pay Commission scales from 483% to 497%. The same report said a Department of Public Enterprises memorandum dated 27 October revised industrial DA for CPSE executives from 1 October 2026, putting it at 59.1% for the 2017 pay scale.

The decision does not automatically apply to state government employees and pensioners, bank staff or public sector employees on industrial DA, whose allowances are set separately.

Eighth Pay Commission still at work

The hike comes while the Eighth Central Pay Commission, constituted on 3 November 2025 under Justice Ranjana Prakash Desai, is still deliberating. As reported by The Hans India in August, the panel is expected to submit its report by May 2027, and the government has not announced a date from which new pay scales would take effect. Employee bodies have pressed their demands meanwhile; the National Council (JCM) staff side, Business Today reported in April, sought a fitment factor of 3.83. Until a new pay structure is notified, DA continues to be revised under the Seventh Pay Commission formula.

Sources

• PIB: Cabinet approves Dearness Allowance to Central Government employees and Dearness Relief to Pensioners (28 October 2026)
• Business Today: Diwali gift: Cabinet approves 3% DA hike for central government employees, pensioners
• PSU Watch: Cabinet hikes DA by 3% to 63%, benefiting 1.17 crore employees and pensioners
• Indian Pay Calculator: Central staff DA rises to 63% from 1 July
• PM India: Cabinet approves additional instalment of DA and DR w.e.f. 01.01.2026 (18 April 2026)
• Business Today: Cabinet clears 2% DA hike as 8th Pay Commission demands gather pace
• The Hans India: Central government clarifies status of 8th Pay Commission report deadline