New Delhi, Oct. 1 — The Union Cabinet on Wednesday approved a 3 per cent increase in Dearness Allowance (DA) and Dearness Relief (DR) for around 49.19 lakh central government employees and 68.72 lakh pensioners. The hike, effective from July 1, 2025, raises the DA/DR from the existing 55 per cent of basic pay or pension to help offset price rises.
I&B Minister Ashwini Vaishnaw said the combined impact on the exchequer will be Rs 10,083.96 crore annually. The hike follows recent GST rationalisation, which reduced prices of essential items such as ghee, butter, paneer, coffee, ice cream, and aspirational goods like TVs, ACs, and washing machines.
The DA/DR revision is based on the formula recommended by the 7th Central Pay Commission. The government revises these allowances twice a year, with the last revision announced in March, effective from January 1. Last month, the Cabinet also approved a performance-linked bonus for railway employees.
