'Diwali gift from PM Modi': Cabinet approves 3% DA increase for central govt employees

NEW DELHI: The Union Cabinet on Wednesday approved a 3 per cent hike in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, benefiting over 1.17 crore people ahead of Diwali. The increase will be effective from July 1, 2026.Announcing the decision, information and broadcasting minister Ashwini Vaishnaw said the Cabinet, chaired by Prime Minister Narendra Modi had approved the increase ahead of the festive season.The decision will benefit 48.54 lakh central government employees and 68.71 lakh pensioners."The fourth decision is a Diwali gift from Prime Minister Narendra Modi to all central government employees and pensioners. Dearness Allowance (DA) and Dearness Relief (DR) have been increased by 3%, effective July 1, 2026," Vaishnaw said."With this increase, the DA and DR rate will rise from 60% to 63%. Details regarding the 6th and 5th Central Pay Commission scales will be provided in the press note," he said."The increase will have an additional financial implication of approximately Rs 10,000 crore for the government and benefit 48 lakh central government employees and 68 lakh pensioners," he added.The latest revision follows a 2 per cent hike approved by the Cabinet in April, which took the DA and DR rate to 60% of basic pay and pension, respectively.The government revises DA and DR twice a year, in January and July, to help employees and pensioners cope with inflation. The latest announcement pertains to the July 2026 DA revision for central government employees.DA is a cost-of-living adjustment paid to government employees as a percentage of basic pay. DR is the corresponding benefit for pensioners. Both are intended to offset the impact of rising prices.Also read: Rs 10,000-crore container scheme to DA hike: Cabinet announces 4 major decisions ahead of DiwaliYou use AI every day. Now get your AI Quotient. Take the AIQ test.