In a move set to benefit more than one crore central government employees and pensioners, the Union Cabinet has approved a 2 per cent increase in Dearness Allowance (DA), raising it from 58 per cent to 60 per cent of basic pay.

The revised rates will come into effect from January 2026. Pensioners will also see a corresponding rise in Dearness Relief (DR), offering a modest uplift in their monthly income.

Dearness Allowance, a key component of government pay, is reviewed twice a year—in January and July—based on movements in the Consumer Price Index for Industrial Workers (CPI-IW). While this latest increase is smaller than some previous revisions, it reflects the current inflationary trend.

What it means for employees

For a central government employee with a basic salary of Rs 30,000, the 2 per cent hike translates into an additional Rs 600 per month. Under the revised structure, DA will rise from Rs 17,400 to Rs 18,000.

Though incremental, the increase is expected to provide some relief amid rising living costs.

Focus shifts to Pay Commission demands

The announcement comes against the backdrop of growing calls for broader salary reforms. Employee unions have been pressing for significant changes under the proposed 8th Pay Commission.

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In a memorandum submitted to the government, the National Council–Joint Consultative Machinery (NC-JCM) has suggested a fitment factor of 3.83. If implemented, this could substantially raise the minimum basic pay from Rs 18,000 to around Rs 69,000, marking a major overhaul of the pay structure.

For now, however, the DA hike offers a limited but welcome increase as discussions over larger pay revisions continue.