New Delhi, October 2026 : In a relief for millions of Central Government employees and pensioners during the festive season, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved an additional instalment of Dearness Allowance (DA) and Dearness Relief (DR), increasing the rates by 3 per cent.
According to a Cabinet statement, the combined annual financial impact of the DA and DR hike on the government exchequer will be Rs 10,016.10 crore. The decision is expected to benefit approximately 48.54 lakh Central Government employees and 68.71 lakh pensioners.
The increase will be effective from July 1, 2026, raising DA and DR from the existing rate of 60 per cent to 63 per cent of basic pay and pension, respectively. The revision is intended to compensate employees and pensioners for rising prices and inflation.
The Cabinet said the increase follows the accepted formula based on the recommendations of the 7th Central Pay Commission. Dearness Allowance is paid to serving employees, while Dearness Relief is provided to pensioners to help protect their purchasing power against inflation.
8th Pay Commission consultations underway
Meanwhile, the 8th Central Pay Commission is conducting consultations on salary, pension and other service-related matters. The commission is gathering submissions and feedback from employees, pensioners and other stakeholders before preparing its recommendations.
The panel is headed by former Supreme Court judge Justice Ranjana Prakash Desai. Its members include former IAS officer Pankaj Jain, who serves as Member-Secretary, and Pulak Ghosh, a Professor of Finance and member of the Economic Advisory Council to the Prime Minister.
The commission's recommendations could affect the financial interests of more than one crore Central Government employees and pensioners, including defence and railway personnel and retirees.
Employees seek higher fitment factor
Employee unions are pressing for a higher fitment factor under the 8th Pay Commission, which would determine the revised basic salary structure. They are also seeking changes to the Dearness Allowance framework, including more frequent revisions and a possible merger of DA with basic pay after a specified threshold is reached.
The outcome of the commission's consultations will be closely watched by employees and pensioners awaiting the next round of salary and pension revisions.
