Centre Raises DA and DR by 3% from 1 July

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a 3 percentage-point increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners on 28 October 2026. The revision applies retrospectively from 1 July 2026 and raises both rates from 60% to 63% of basic pay or pension.

DA and DR Revision

DA is an allowance paid to serving employees, while DR is the corresponding relief paid to pensioners. The revised rates apply to eligible Central Government employees and pensioners. The decision is based on the accepted formula associated with recommendations of the 7th Central Pay Commission and is intended to offset the effect of rising prices.

The revision is expected to benefit approximately 48.54 lakh employees and 68.71 lakh pensioners, or more than 1.17 crore people in total. The combined annual cost to the Union Government exchequer is estimated at ₹10,016.10 crore. Eligible recipients are due arrears for July, August, September and October 2026 with their October salary or pension.

Pay Commission and Price Index Context

Central Pay Commissions review the pay structure and related allowances of Central Government employees. The 7th Central Pay Commission is the basis cited for the accepted DA and DR calculation formula. Consumer price changes for industrial workers are tracked through the Consumer Price Index for Industrial Workers (CPI-IW), a statistical series used in labour and inflation analysis.

Separate revisions effective from 1 July 2026 were also approved for employees whose salaries are governed by the 5th and 6th Central Pay Commissions. The announcement was made by Information and Broadcasting Minister Ashwini Vaishnaw.

Government Pay and Pension Components

Basic pay is the pay component on which the announced DA rate is calculated; DR is calculated against pension. The approved change raises the applicable rate by three percentage points, from 60% to 63%, rather than by 3% of the previous allowance amount.

Important Facts for Exams

• Dearness Allowance is paid to serving government employees, while Dearness Relief is paid to pensioners.
• The Union Cabinet is chaired by the Prime Minister of India.
• The 7th Central Pay Commission examined the pay structure of Central Government employees.
• The Consumer Price Index for Industrial Workers measures changes in the retail prices faced by industrial worker households.

The revised DA and DR rates took effect on 1 July 2026, and the announced increase is three percentage points. The estimated annual fiscal impact is ₹10,016.10 crore.