The move aims to offset inflation and improve purchasing power. DA is revised twice a year based on CPI-IW data.
The Cabinet has approved a 2 per cent increase in Dearness Allowance (DA) for central government employees. This decision, finalized during a Cabinet meeting on Saturday, raises the allowance from the current rate of 58 per cent to 60 per cent. The adjustment serves to address the long-standing wait of the workforce for a revision in their compensation structure.
Relief extended to pensioners
The 2 per cent hike also applies to Dearness Relief (DR) for pensioners, which similarly increases from 58 per cent to 60 per cent. The Dearness Allowance is a fundamental cost-of-living adjustment designed to support government employees and pensioners. It functions specifically to offset the impact of inflation on fixed incomes. The allowance is calculated as a percentage of the basic pay and undergoes periodic revisions based on established inflation indices to maintain the purchasing power of the workforce.
How DA is calculated and revised
The allowance, linked to inflation, is revised twice a year, typically in January and July. It is worked out based on the Consumer Price Index for Industrial Workers (CPI-IW), released monthly by the Labour Bureau under the Labour Ministry.
Previous DA hike in October 2025
Earlier in October of 2025, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved a 3 per cent increase in Dearness Allowance for Central Government employees and Dearness Relief for pensioners, effective from July 1, 2025.
The decision raised the then-existing rate from 55 per cent to 58 per cent of the basic pay or pension, according to a release by the Cabinet.
The hike, aimed at offsetting the impact of inflation, was sought to benefit approximately 49.19 lakh Central Government employees and 68.72 lakh pensioners.
The total financial implication of the decision on the exchequer was estimated at Rs 10,083.96 crore annually.
The revision followed the formula based on the recommendations of the 7th Central Pay Commission.
State-level developments and Madhya Pradesh decision
Next, in March of this year, Madhya Pradesh Chief Minister Mohan Yadav chaired a cabinet meeting held at the state secretariat (Mantralaya), and the council of ministers gave a nod to various development works worth Rs 6,940 crore and the continuation of several schemes.
The Cabinet also approved Rs 82.39 crore for the Mahana Micro Irrigation Project in Rewa district, along with a 3 per cent increase in dearness allowance for government employees and dearness relief for pensioners w.e.f July 1, 2025, raising it to 58 per cent.
Published on April 18, 2026
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