Dearness Allowance Raised 3% to 63% From 1 July 2026

The Union Cabinet, chaired by Prime Minister Narendra Modi, cleared an additional instalment of Dearness Allowance (DA) for central government employees and of Dearness Relief (DR) for pensioners on 28 October 2026. The instalment adds three percentage points to the rates in force, which stood at 60 per cent of basic pay or pension, so the figure now reads 63 per cent. The revised rate applies with effect from 1 July 2026, which means the months already gone by will be settled as arrears.

Why the allowance is paid

DA and DR exist to shield pay and pensions from rising prices. When the cost of living climbs, a fixed salary buys less, so the government tops it up by a percentage of basic pay rather than rewriting the pay scales themselves. Serving staff receive the top-up as Dearness Allowance; retired staff receive the same relief under the name Dearness Relief.

What the decision costs and whom it reaches

Paying the two together at the higher rate will draw an extra 10,016.10 crore rupees from the exchequer every year. The order covers roughly 48.54 lakh serving employees of the Union government and 68.71 lakh pensioners, which makes it one of the widest-reaching money decisions the Cabinet takes in any year.

The formula behind the number

The size of the rise is not settled by discretion. It flows from the accepted formula built on the recommendations of the 7th Central Pay Commission, which ties the allowance to movements in the consumer price index for industrial workers. Because the formula does the arithmetic, the Cabinet decision is in practice a ratification of what the index has already recorded, and the same percentage is extended to pensioners so that the two groups are not treated differently.

Why aspirants should note it

Questions on this decision usually turn on three things: the percentage of the rise, the date it takes effect, and the Pay Commission whose formula governs it. The cost to the exchequer and the number of beneficiaries are the next most likely asks, since both are stated in the Cabinet communication itself.