Cabinet clears 3% hike in DA and DR, costing exchequer Rs 10,016.10 crore a year; 1.17 crore beneficiaries

What is Dearness Allowance and how is the 3% hike calculated? Key facts on the Cabinet’s DA and DR decision for central staff

PGurus Newsdesk

October 28, 2026

Cabinet approves a 3% DA hike, raising Dearness Allowance to 63% from July 1, 2026. Know who benefits, the cost and when arrears apply

The hike will cost the exchequer Rs 10,016.10 crore a year, the government said

The Union Cabinet on Wednesday approved a 3 per cent increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, with effect from July 1, 2026. The move raises both from 60 per cent to 63 per cent of basic pay and pension respectively.

The hike is expected to benefit about 48.54 lakh central government employees and 68.71 lakh pensioners. The government said the combined annual cost will be Rs 10,016.10 crore, adding to the Centre’s expenditure.

The extra instalment follows the accepted formula based on the recommendations of the 7th Central Pay Commission. Because the revision applies from July 1, 2026, eligible employees and pensioners are entitled to the revised rates from that date, which means arrears for the intervening months.

DA is paid to serving employees to offset the impact of inflation on the cost of living, while DR does the same for pensioners. The government said the revisions are linked to an established formula and are meant to protect the purchasing power of employees and pensioners against price rises.

For all the latest updates, download PGurus App.