Cabinet Approves 3% DA Hike for Central Government Employees and Pensioners

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a 3% hike in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners. The hike, effective from October 1, 2025, will be added to the existing rate of 55% of the Basic Pay/Pension.

Who Benefits from the DA Hike?

• 49.19 lakh Central Government employees
• 68.72 lakh pensioners

This decision aims to provide relief against rising inflation and ensure that government employees and pensioners maintain their purchasing power.

Financial Impact

The annual burden on the exchequer due to this DA and DR increase is estimated at ₹10,083.96 crore.

Background

• The DA is revised periodically based on inflation and cost of living indices, following the 7th Central Pay Commission formula.
• Earlier, in March 2025, the Cabinet had approved a 2% DA hike, which took the rate to 55% effective from January 1, 2025.
• With this latest hike, the effective DA rate rises to 58% of the Basic Pay/Pension.

Why It Matters

The DA hike is a significant step for millions of employees and retirees who rely on this allowance to offset the impact of rising prices. It also reflects the government’s continued commitment to safeguarding the financial well-being of its workforce and pensioners.