Dearness Allowance and Dearness Relief Hike: 2% Increase for Central Government Employees and Pensioners

Key facts

• The Union Cabinet approved a 2% increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, effective from 1 January 2026.
• The DA rate has been raised from 58% to 60% of basic pay.
• The hike benefits approximately 50.46 lakh central government employees and 68.27 lakh pensioners.
• The annual financial implication on the exchequer is estimated at ₹6,791.24 crore.
• The revision is based on the recommendations of the 7th Central Pay Commission.
• DA and DR are revised twice annually, on 1 January and 1 July, based on the All-India Consumer Price Index for Industrial Workers published by the Labour Bureau.
• The December 2025 index data showed a 12-month average of 145.54 points, resulting in a calculated DA rate of 60.33%, rounded down to 60%.
• The decision was announced by the Ministry of Finance (MoF).