New Delhi, Oct 28: The Union Cabinet on Wednesday approved a 3 per cent hike in dearness allowance and dearness relief, benefiting over 1.17 crore central government employees and pensioners.

Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw said the Union Cabinet headed by Prime Minister Narendra Modi has taken the decision to increase the DA and DR ahead of Diwali.
The increase will be effective from July 1, 2026.
The increase is expected to benefit approximately 48.54 lakh Central Government employees and 68.71 lakh pensioners across the country.
According to the government, the combined annual financial implication of the increase in DA and DR will be Rs 10,016.10 crore, adding to the Centre's expenditure.
The additional instalment of DA and DR has been approved in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission.
The Dearness Allowance is paid to serving government employees to help offset the impact of inflation on their cost of living. Dearness Relief serves a similar purpose for pensioners, helping them manage the effect of rising prices on their pension income.
The revision will be applicable retrospectively from July 1, 2026, meaning eligible employees and pensioners will be entitled to the revised rates from that date.
The Cabinet's decision comes as the government continues to adjust inflation-linked benefits for its employees and pensioners through periodic revisions in DA and DR.
The increase in these allowances is linked to an established formula and is intended to help protect the purchasing power of government employees and pensioners against price increases.
With the latest revision, both serving employees and pensioners will receive an additional three percentage points over the previous rate of 60 per cent of basic pay or pension, respectively.
The decision covers Central Government employees and pensioners and will have a combined annual impact of more than Rs 10,000 crore on the government exchequer.