In a festive season announcement, the Union Cabinet has approved a 3 percent increase in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners. The hike is effective retroactively from 1 July 2025, and is seen by many as a Dussehra-Diwali gift from the government.
Under the new rate, DA will rise from 55 % to 58 % of basic pay/pension. An employee with a basic salary of ₹60,000, who earlier got ₹33,000 DA under 55 %, will now receive ₹34,800 - a monthly increment of ₹1,800. The annual financial burden of this decision is estimated at around ₹10,083.96 crore.
The hike will benefit about 49.19 lakh central government officials and 68.72 lakh pensioners. Arrears from July through September 2025 are expected to be disbursed with October pay.
This increase is based on the formula under the 7th Central Pay Commission framework. As the country gears up for the 8th Pay Commission implementation from January 2026, many see this as one of the final allowance revisions under the current regime.
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