In a festive boost for over 1.14 crore central government employees and pensioners, the Union Cabinet has approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR), raising the rate from 55% to 58% of basic pay. The decision, taken in a high-level meeting chaired by Prime Minister Narendra Modi, comes just ahead of Diwali and is expected to provide timely financial relief amid rising living costs.
Key Highlights from the Cabinet Meeting
- DA/DR Hike: Approved increase of 3%, effective from July 1, 2025
- Beneficiaries: Over 48 lakh employees and 66 lakh pensioners
- Payment Schedule: Revised DA to be reflected in October salaries, with arrears for July–September disbursed as a lump sum
- Calculation Basis: Based on the Consumer Price Index for Industrial Workers (CPI-IW), which rose to 145.0 in June
What It Means for Employees
For an entry-level employee earning ₹18,000 basic pay:
- Current DA (55%): ₹9,900/month
- New DA (58%): ₹10,440/month
- Monthly Gain: ₹540
- Annual Gain: ₹6,480
This hike marks the final revision under the 7th Pay Commission, with the 8th Pay Commission set to roll out from January 2026.
Employee Sentiment
The Confederation of Central Government Employees and Workers had earlier urged Finance Minister Nirmala Sitharaman to expedite the decision, citing delays and inflationary pressure. The Cabinet’s timely approval is being hailed as a “Diwali gift” by unions and policy analysts alike.