Diwali bonanza for central govt employees as Cabinet approves 3% DA hike

Cabinet approves 3% dearness allowance hike for central government employees ahead of festive seasonThe latest decision follows expectations of an increase in the July 2026 instalment. (Photo: GettyImages)New Delhi,Oct 28, 2026 15:56 ISTThe Union Cabinet has approved a 3% hike in dearness allowance (DA) for central government employees and a corresponding increase in dearness relief (DR) for pensioners, benefiting nearly 50 lakh employees and 68 lakh pensioners.The decision will raise DA and DR from 60% to 63% of basic pay and pension, respectively. The hike will have a financial implication of Rs 10,016 crore.The increase comes ahead of Diwali and is intended to help government employees and pensioners offset the impact of rising prices. While DA is paid to serving central government employees, DR is provided to pensioners.DA HIKED FROM 60% TO 63%The latest revision raises DA by three percentage points, from the existing 60% of basic pay to 63%. The corresponding increase in DR will take the relief rate for pensioners from 60% to 63% of their eligible basic pension. DA is calculated as a percentage of basic pay and revised periodically to account for changes in the cost of living. The increase in the allowance raises an employee’s monthly pay, with the actual benefit depending on their basic salary.For instance, a central government employee with a basic pay of Rs 18,000 will receive an additional Rs 540 per month following the three-percentage-point increase. An employee with a basic pay of Rs 35,400 will get an additional Rs 1,062 per month. Pensioners will receive a corresponding increase in their monthly dearness relief, calculated on their eligible basic pension.PREVIOUS HIKE WAS ANNOUNCED IN APRILThe latest decision follows the previous revision announced in April 2026, when the government raised DA and DR by two percentage points, from 58% to 60%, with effect from January 1, 2026.The government generally revises DA and DR twice a year, with instalments effective from January 1 and July 1. The latest increase relates to the July 2026 instalment.Since the revision is linked to the July instalment, eligible employees and pensioners will also be entitled to arrears from the applicable effective date, subject to the terms of the government order.The combined financial implication of Rs 10,016 crore reflects the cost of the DA and DR revision for the government.HOW DA HIKE AFFECTS TAKE-HOME SALARYThe three-percentage-point increase does not mean a 3% rise in an employee’s entire salary. DA is calculated on basic pay, which means the additional amount varies according to an employee’s pay level.For an employee drawing a basic salary of Rs 18,000, the monthly DA will rise from Rs 10,800 at the existing 60% rate to Rs 11,340 at 63%, an increase of Rs 540.For someone with a basic salary of Rs 50,000, monthly DA will rise from Rs 30,000 to Rs 31,500, an increase of Rs 1,500.The corresponding increase for pensioners will depend on their eligible basic pension. The revised DA and DR rates will apply under the terms and effective date specified in the government’s order.- Ends