Govt hikes DA, DR for Central Govt Employees to 63% from 60%

The Union Cabinet has approved a 3% hike in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, raising the total rate from 60% to 63% of basic pay.

The revised rates will be effective retrospectively from July 1, 2026, with beneficiaries eligible for arrears for the intervening period. The combined impact on the exchequer on account of the increase in both DA and DR would be Rs 10,016 crore per annum, the government said in a press release.

The increase is expected to benefit around 4.85 million central government employees and 6.9 million pensioners, according to the release. DA is paid to serving employees, while DR is provided to pensioners. Both are adjusted periodically to help offset the impact of inflation on their incomes.

DA Hike Details

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The central government typically revises DA and DR twice a year, with changes generally taking effect from January and July. It last raised both rates by two percentage points to 60 per cent of basic pay and pension in April. DA and DR revisions are linked to changes in the cost of living and are intended to help government employees and pensioners maintain their purchasing power as prices rise.

The latest increase will raise the allowance component of employees’ remuneration and pensioners’ payouts, while adding to the Centre’s recurring expenditure. The central government has pegged its revenue expenditure at Rs 41.25 trillion in the Budget for 2026-27 (FY27), which includes a Budget Estimate (BE) of Rs 2.96 trillion for pension outgo.

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