Cabinet Approves 2% DA Hike for Central Government Employees and Pensioners from January 2026

In a significant relief to Central Government employees and pensioners, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved an additional instalment of Dearness Allowance (DA) and Dearness Relief (DR) effective from January 1, 2026.

As per the decision, the DA and DR rates will be increased by 2%, raising them from the existing 58% to 60% of Basic Pay and Pension respectively. The hike is aimed at offsetting the impact of rising prices and inflation.

Financial Impact and Beneficiaries

The financial burden on the government due to this increase is estimated to be ₹6,791.24 crore per annum. The decision is expected to benefit approximately:

• 50.46 lakh Central Government employees
• 68.27 lakh pensioners

Based on 7th Pay Commission Formula

The revision in DA and DR follows the accepted formula based on the recommendations of the 7th Central Pay Commission. This formula takes into account the movement of the Consumer Price Index for Industrial Workers (CPI-IW), ensuring that compensation is aligned with inflation trends.

With this latest revision, the government continues its periodic adjustment of DA and DR to safeguard the real income of employees and pensioners against inflationary pressures.

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