The DA hike that central government staff and pensioners wait for every autumn has arrived just ahead of Diwali. The Union Cabinet on Wednesday, 28 October 2026, approved a rise of 3 percentage points in Dearness Allowance for serving employees and Dearness Relief for pensioners, lifting both from 60 per cent to 63 per cent of basic pay and basic pension, according to a Press Information Bureau release.
The revised rate applies from 1 July 2026, so beneficiaries will also be owed arrears for the months that have already passed. Information and Broadcasting Minister Ashwini Vaishnaw announced the decision after the Cabinet meeting chaired by Prime Minister Narendra Modi.
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DA hike at a glance
The government puts the combined cost of the higher DA and DR at Rs 10,016.10 crore a year. The decision covers about 48.54 lakh serving central government employees and 68.71 lakh pensioners, or roughly 1.17 crore people in all, The Hindu reported.
The increase follows the accepted formula based on the recommendations of the 7th Central Pay Commission, the PIB release said. Under that system, DA and DR are reset twice a year, with instalments due from January and July, and the rate is tied to the All India Consumer Price Index for Industrial Workers.
Hindustan Times reported that Vaishnaw described the decision as a “Diwali gift†to employees and pensioners. Diwali falls on 8 November this year, the New Indian Express noted.
How much more employees and pensioners get
Because DA and DR are calculated as a share of basic pay or basic pension, the gain depends on each person’s pay level. CNBC TV18 worked through two examples. An employee with a basic salary of Rs 50,000 a month now receives Rs 30,000 as DA at 60 per cent. At 63 per cent that becomes Rs 31,500, or Rs 1,500 more every month.
A pensioner with a basic pension of Rs 25,000 a month currently draws Rs 15,000 as DR. At the new rate that rises to Rs 15,750, an increase of Rs 750 a month. For lower pay levels the monthly gain is smaller, and for senior officers it is larger, but the percentage rise is the same for everyone covered.
Arrears from July to October
Since the hike is retrospective from 1 July, employees and pensioners are entitled to the difference for July, August, September and October. The New Indian Express reported that the arrears are expected to be paid along with the October salary, subject to the government’s disbursement schedule. That would put an extra lump sum in many households shortly before the festival.
In the example above, four months of arrears at Rs 1,500 a month would add up to Rs 6,000 for the employee, before tax, and Rs 3,000 for the pensioner. DA is taxable as part of salary income, so the amount actually credited will vary from person to person.
The second revision of 2026
This is the second DA and DR decision this year. The previous one was announced on 18 April and took effect from 1 January 2026. It raised both rates by 2 percentage points, from 58 per cent to 60 per cent, at a cost of Rs 6,791.24 crore a year, Hindustan Times reported. Business Standard also described the April revision as a 2 point increase that took the rate to 60 per cent.
The latest step of 3 points is therefore larger than the January instalment, and its yearly cost is higher by more than Rs 3,200 crore. The next revision would normally fall due from January 2027, though the final call will depend on inflation data and the usual procedure, the New Indian Express said.
Why the DA rate keeps rising
DA exists to protect the real value of basic pay against price rises. The New Indian Express pointed out that consumer price inflation stood at 4.82 per cent in August, above the Reserve Bank of India’s medium term target of 4 per cent, and that the RBI has projected average inflation of 5.2 per cent for the full year.
Hindustan Times noted that the Pay Commission’s report describes DA as a payment to protect basic pay from erosion in real value on account of inflation. Each revision tracks the movement of the industrial workers’ price index over the preceding months, which is why the rate climbs steadily through the life of a pay commission.
The Cabinet briefing document shows that the decision also revises rates for staff still drawing pay under older pay scales. For the 6th Central Pay Commission scale, DA goes up from 262 per cent to 269 per cent, and for the 5th Central Pay Commission scale it rises from 483 per cent to 497 per cent.
Other decisions at the same meeting
The DA hike was one of four decisions announced on Wednesday, with a total outlay of Rs 29,267 crore, according to the briefing. The Cabinet approved a Container Manufacturing Promotion Scheme worth Rs 10,000 crore running up to FY 2039 40, which includes Rs 859 crore for interest subvention on term loans, Rs 150 crore for testing and certification, and Rs 8,891 crore in operating expenditure support. Units must meet minimum local content of 70 per cent, rising to 90 per cent later.
It also cleared a Khelo India Sports Goods Manufacturing Scheme with an outlay of Rs 1,856 crore over eight years and allocated Rs 7,395 crore to the Pradhan Mantri Viksit Gram Swaraj Yojana, which Vaishnaw called a shift towards capacity building and planning at the local level, The Hindu reported.
Read more on Bharat Stories about how retail inflation moved in September, tax saving plans for salaried employees, and the Varishtha Pension Bima Yojana for senior citizens.
Featured image photo: Monito (Money Transfer Comparison), CC BY 2.0, via Wikimedia Commons (Indian 100 and 2000 rupee notes, photographed in November 2016).
FAQ
What is the new DA rate for central government employees?
The Cabinet raised DA and DR from 60 per cent to 63 per cent of basic pay and basic pension, effective from 1 July 2026.
How many people benefit from the DA hike?
About 1.17 crore people, made up of 48.54 lakh central government employees and 68.71 lakh pensioners.
When will the arrears be paid?
Arrears for July to October are expected with the October salary, subject to the government’s disbursement schedule, the New Indian Express reported.
Sources
- Press Information Bureau, Union Cabinet decision, 28 October 2026: rate change, effective date, 7th Pay Commission formula and cost.
- PIB Cabinet briefing document, 28 October 2026: total outlay, other schemes and revised rates under older pay scales.
- The Hindu, 28 October 2026: number of employees and pensioners and other Cabinet decisions.
- Hindustan Times, 28 October 2026: minister’s remarks and details of the April 2026 revision.
- The New Indian Express, 28 October 2026: arrears, Diwali date, inflation figures and next revision.
- CNBC TV18, 28 October 2026: worked examples for employees and pensioners.
- Business Standard, 28 October 2026: cost figure and previous revision.