The move, effective January 1, 2026, is set to benefit around 50.46 lakh central government employees and 68.27 lakh pensioners, offering partial relief against rising prices.
The decision, cleared at a Cabinet meeting chaired by Prime Minister Narendra Modi, follows the government’s biannual revision cycle for DA.
The allowance was previously set at 58%.
With the latest revision, government employees will see a modest increase in their monthly payouts. For instance, an employee with a basic salary of ₹30,000 will now receive ₹18,000 as DA, up from ₹17,400 earlier—translating into an additional ₹600 per month.
Dearness allowance is a cost-of-living adjustment paid as a percentage of basic salary to offset the impact of inflation on income. Pensioners receive a corresponding benefit through dearness relief. The rates are revised twice a year, typically in January and July, based on changes in the Consumer Price Index for Industrial Workers (CPI-IW).
The latest hike aligns with expectations of a 2–3% increase, reflecting recent inflation trends. While the increment is modest, it extends financial support to over one crore beneficiaries and helps preserve purchasing power amid persistent price pressures.
How DA is calculated
For central government employees, DA is calculated using the following formula:
DA (%) = [(Average AICPI for the past 12 months (Base Year 2001=100) – 115.76) / 115.76] x 100
For public sector employees, the formula used is:
DA (%) = [(Average AICPI for the past 3 months (Base Year 2016=100) – 126.33) / 126.33] x 100
