New Delhi, 18 April (H.S.): The Union Cabinet has approved a 2 percentage point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, raising the effective rate from 58% to 60% of basic pay and pension. The decision, taken under the chairmanship of Prime Minister Narendra Modi, will be retrospectively effective from 1 January 2026, and is expected to benefit about 50.46 lakh central government employees and 68.27 lakh pensioners nationwide.

According to Union Minister Ashwini Vaishnaw, who briefed the media at the National Media Centre, the Cabinet has cleared an additional instalment of DA and DR to cushion employees and retirees against the rising impact of inflation. The hike is in line with the formula approved by the Seventh Central Pay Commission and is based on the latest All India Consumer Price Index for Industrial Workers (CPI‑IW) reading, which underpins the government’s biannual DA/DR revisions.

Under the new order, the DA‑to‑basic‑pay ratio for active employees and the DR‑to‑pension ratio for pensioners will move from 58% to 60%, with the benefit payable from January 2026 onward. Employees are expected to receive arrears covering the period from January until the revised pay is implemented, along with the ongoing monthly DA credit, while pensioners will receive corresponding adjustments in their monthly pensions.

The government estimates that the 2% increase will add an annual burden of ₹6,791.24 crore on the exchequer, reflecting the scale of the payout across both the serving workforce and the large retired cohort. The move is seen as a modest but significant relief measure at a time when employee federations and trade unions have been demanding broader pay reforms and the setting up of an 8th Pay Commission.

By adhering to the statutory formula and retaining the 50–50 DA‑indexation model (based on CPI‑IW), the Centre has sought to balance fiscal prudence with the need to protect the purchasing power of government employees and pensioners amid persistent inflationary pressures.

Officials expect the announcement to bring immediate predictability for household budgets and reduce the uncertainty that had built up due to the delayed declaration of the January 2026 DA revision.

The hike follows the last revision in October 2025, when DA was raised from 55% to 58% with effect from 1 July 2025, implemented with arrears for both employees and pensioners.

The government continues to revise DA twice a year—on 1 January and 1 July—as part of its standard compensation framework, while pressures are mounting for a more comprehensive review of the pay and pension structure in the coming years.

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Hindusthan Samachar / Jun Sarkar