DA raised to 60% as Cabinet approves hike for central government employees, pensioners

The Union Cabinet on Saturday approved a 2-percentage-point hike in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners, raising both to 60% of basic pay and pension.

The decision, taken at a meeting chaired by Narendra Modi, will be effective from January 2026 and is set to benefit around 12.2 million people, including 5.4 million employees and 6.8 million pensioners. The move is expected to increase the government’s annual expenditure by ₹6,791.24 crore.

Union Information and Broadcasting Minister Ashwini Vaishnaw said the revision follows the standard formula linked to the Consumer Price Index for Industrial Workers (CPI-IW), which is used to adjust salaries and pensions in line with inflation. DA and DR were previously at 58%.

The government revises DA and DR twice a year — in January and July — to help offset rising prices. While DA applies to serving employees, DR is extended to pensioners, and any increase directly boosts take-home income.

An official statement said the hike is in line with the formula recommended by the 7th Central Pay Commission. The announcement comes slightly later than usual, as such revisions are typically declared by March.

Meanwhile, the government has begun the process for the 8th Pay Commission, which will determine the next revision of salaries, pensions and allowances. The commission, set up in November 2025, has been given 18 months to submit its recommendations, with April 30 as the deadline for stakeholders to provide inputs.

The 7th Pay Commission, implemented in 2016, had fixed the minimum basic pay at ₹18,000 per month and the maximum at ₹2.5 lakh. The upcoming revision is expected to recalibrate pay structures using a fitment factor — a multiplier applied to existing salaries.

The DA hike comes amid broader concerns over wages and working conditions, highlighted by recent labour unrest in industrial hubs like Noida and Gurugram, even as the government moves to cushion its workforce against inflation.