Government Hikes DA and DR by 3 Percent Ahead of Diwali

Mumbai, October 28: The central government has announced a 3 per cent hike in Dearness Allowance for its employees and Dearness Relief for its pensioners. The revision will benefit over 1.17 crore individuals linked to the central government payroll and pension system.

An official release said the Union Cabinet, chaired by Prime Minister Narendra Modi, approved an additional instalment of DA and DR on Wednesday. The revised allowance will take effect from July 1, 2026.

The hike has been introduced to address rising living costs. As a result, the DA and DR rate applicable on basic pay or pension has moved up to 63 per cent from 60 per cent.

The government estimates that the combined increase in DA and DR will entail an annual outlay of Rs 10,016.10 crore.

Described as a Diwali gift by the Centre, the move will benefit around 48.54 lakh central government employees and 68.71 lakh pensioners.

The statement added that the increase is in line with the approved formula derived from the recommendations of the 7th Central Pay Commission.

Separately, the 8th Central Pay Commission is holding talks on pay and pension matters. These discussions are expected to give priority to salary conditions and the suggestions submitted by all stakeholders.

The 8th Pay Commission is led by former Supreme Court judge Ranjana Prakash Desai. Its members include Pankaj Jain, a former IAS officer who serves as member-secretary, and Pulak Ghosh, a finance professor and member of the Prime Minister's Economic Advisory Council.

Inputs received during these consultations will be factored in while the commission prepares its recommendations. The commission's work is likely to influence the financial interests of more than one crore employees and pensioners.