Good news for millions of Central government workers and retirees in India. On Wednesday, Prime Minister Narendra Modi’s Union Cabinet approved a 3% boost to Dearness Allowance (DA) for employees and Dearness Relief (DR) for pensioners. This hike kicks in from July 1, 2025, raising the rate from 55% to 58% of basic pay or pension. It helps offset rising prices due to inflation.
The move will cost the government about Rs 10,084 crore each year. It reaches around 49.19 lakh Central government employees and 68.72 lakh pensioners, including family pensioners. An official statement says this follows the formula from the 7th Central Pay Commission recommendations.
The increase applies retroactively from July 1, so workers get back payments for July, August, and September alongside their October salary—just in time for Diwali celebrations. For example, someone with a Rs 30,000 basic salary gains an extra Rs 900 monthly, while a Rs 40,000 earner picks up Rs 1,200 more. That adds up to Rs 2,700 or Rs 3,600 in arrears over three months, like a festive bonus.
DA and DR updates happen twice yearly, in January and July, tied to inflation tracked by the All India Consumer Price Index for Industrial Workers (CPI-IW). Delays in announcements mean arrears cover the gap. This could be the final tweak under the 7th Pay Commission, as the 8th Pay Commission might start in January 2026.
The cabinet timed this ahead of Diwali, matching the usual pattern: one hike in March and another in October. The last one came in March 2025, lifting DA by 2% to 55% from January 1, with a yearly cost of Rs 6,614 crore. Before that, October 2024 saw a 3% jump to 53%. These steady DA hikes keep pace with India’s cost-of-living pressures for government staff.
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