Union Cabinet Approves 3% Hike in Dearness Allowance and Dearness Relief

New Delhi – The Union Cabinet today approved a 3 percent increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, effective July 1, 2025.

The decision, announced on October 1, 2025, will benefit approximately 49.19 lakh central government employees and 68.72 lakh pensioners. This increase is intended to help offset the impact of rising prices and maintain the real value of employees’ and pensioners’ incomes. The annual financial impact of the hike is estimated at Rs 10,083.96 crore, according to I&B Minister Ashwini Vaishnaw.

The increase raises the DA/DR to 58 percent of basic pay/pension, based on the recommendations of the 7th Central Pay Commission. This adjustment follows a previous revision in March, which was effective from January 1. The government revises DA/DR twice each year to account for inflation, a key factor in maintaining economic stability for those reliant on fixed incomes – learn more about inflation and its impact on the Reserve Bank of India website.

“The combined impact on the exchequer on account of an increase in DA and DR will be Rs 10,083.96 crore per annum,” Vaishnaw stated while briefing the media on the Cabinet’s decisions. Officials indicated that the increased allowances and relief will be disbursed with the next salary and pension payments.