In a festive pre-Diwali gesture, the central government has approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners. With this revision, the DA has increased from 55% to 58% of the basic salary and pension.
The decision, approved by the Union Cabinet led by Prime Minister Narendra Modi, will benefit approximately 1.15 crore individuals — including 48 lakh serving employees and 68 lakh pensioners. The hike will be implemented retrospectively from July 1, 2025, and the arrears for July, August, and September will be disbursed along with the October salary, just ahead of Diwali.
Financial Impact and Background
The 3% increase is estimated to impose an additional ₹10,084 crore annual burden on the exchequer. This revision aligns with the established formula recommended by the 7th Central Pay Commission, which links DA/DR adjustments to inflation indices.
Dearness Allowance and Dearness Relief are crucial components of salary and pension structures, designed to offset the impact of inflation and maintain the purchasing power of government employees and retirees.
Earlier in March 2025, the government had announced a 2% hike, raising the DA/DR from 53% to 55%, effective from January 1, 2025.
Much-Awaited Relief Amid Festive Season
As the government typically revises DA/DR twice a year — in January and July — employees had been eagerly awaiting this announcement. The timing of the hike, right before the Diwali season, brings welcome relief to families coping with festive expenses and rising living costs.
This latest increase reflects the government’s ongoing commitment to supporting its workforce and ensuring their financial well-being in the face of inflationary pressures.
