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Dearness Allowance is revised twice a year (Img: Internet)
New Delhi: The Union Cabinet has approved a 2 per cent increase in Dearness Allowance (DA) for central government employees, according to official sources. The move is part of the government’s periodic revision aimed at cushioning employees against rising inflation.
Dearness Allowance is revised twice a year typically in January and July to help maintain the purchasing power of employees and pensioners.
Union minister Ashwini Vaishnaw, after the Cabinet meeting, said the Union Cabinet has approved the release of an additional instalment of Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners with effect from January 1, 2026 representing an increase of 2 per cent of the basic pay/pension, to compensate against price rise.
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The latest hike will benefit both serving government employees and pensioners, as Dearness Relief (DR) is revised in line with DA. The allowance is calculated as a percentage of basic pay and is a key component of government compensation.
In the previous revision in October, DA was increased from 55 per cent to 58 per cent, effective from July 1, 2025, with arrears paid subsequently.
Dearness Allowance is designed to offset the impact of inflation by ensuring that salaries and pensions keep pace with rising prices. It plays a critical role in preserving real income, especially during periods of economic fluctuation.
With the latest increase, employees can expect a modest rise in monthly earnings, depending on their basic pay structure.
The decision comes amid growing demands from employee unions for comprehensive salary revisions under the proposed 8th Pay Commission. The National Council Joint Consultative Machinery (NC-JCM) has recommended a higher fitment factor, which could significantly increase the minimum basic pay.
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Other suggestions include expanding the definition of family for pay calculations, reducing pay disparities, and linking allowances more closely to inflation trends.
Alongside the DA hike, the Cabinet is also reported to have approved a Sovereign Maritime Fund with a proposed corpus of ₹13,000 crore. The fund aims to provide stable insurance support for Indian shipping.
Additionally, the government is said to have extended the Pradhan Mantri Gram Sadak Yojana (PMGSY) till 2028, with an additional allocation of ₹3,000 crore to boost rural road connectivity.
