Central government employees and pensioners are set to receive higher monthly payments after the Union Cabinet cleared a 3 per cent increase in Dearness Allowance (DA) and Dearness Relief (DR), with the change taking effect from July 1, 2026. The decision was taken in a meeting chaired by Prime Minister Narendra Modi on Wednesday, October 28, 2026, and comes just ahead of Diwali.
Information and Broadcasting Minister Ashwini Vaishnaw announced the approval after the Cabinet meeting. He described the move as a “Diwali gift from Prime Minister Narendra Modi” for central government employees and pensioners, adding that the revision is intended to help offset rising prices during the festive period.
What the Cabinet approved
The revised rates raise DA and DR from 60 per cent to 63 per cent of basic pay and pension, respectively. The benefit will cover about 48.54 lakh central government employees and 68.71 lakh pensioners, taking the total number of beneficiaries to more than 1.17 crore.
The government has estimated the annual financial impact of the decision at Rs 10,016.10 crore. Since the increase is retrospective from July 1, 2026, eligible employees and pensioners will also receive arrears for the months between July and the new payment cycle, likely with forthcoming salary or pension disbursements.
How the revision works
The adjustment follows the accepted formula linked to the recommendations of the Seventh Central Pay Commission and the movement of the All India Consumer Price Index for Industrial Workers (AICPI-IW). The previous revision had lifted DA and DR to 60 per cent from January 1, 2026.
For those still drawing pay or pension under earlier pay commission structures, the government has also cleared corresponding increases. Under the Sixth Central Pay Commission scales, DA and DR will rise by 7 percentage points, from 262 per cent to 269 per cent of basic pay or pension. Under the Fifth Central Pay Commission scales, the rates will increase by 14 percentage points, from 483 per cent to 497 per cent, effective from the same date.
What it means in monthly terms
The 3 per cent revision will translate into a monthly increase equal to 3 per cent of basic pay. For example, an employee with a basic pay of Rs 18,000 will get an additional Rs 540 per month, while a pensioner drawing a basic pension of Rs 20,000 will receive an extra Rs 600 as Dearness Relief.
The revised rates will remain in force for the July–December 2026 period until the next scheduled revision. The Cabinet’s decision is part of the government’s regular inflation-linked adjustment of allowances aimed at preserving purchasing power for serving employees and pensioners.
The announcement comes days before Diwali, which is expected to be celebrated on November 8 this year.
