The Union Cabinet on April 18 approved a 2% increase in Dearness Allowance (DA) for central government employees and Dearness Relief for pensioners, lifting the rate from 58% to 60% of basic pay with retrospective effect from January 1, 2026.
The revision, chaired by Prime Minister Narendra Modi, follows weeks of delay and mounting pressure from employee unions who had flagged growing discontent over the government’s failure to announce the January cycle hike on its usual late-March timeline. According to an official statement, the combined impact on the exchequer from the DA and DR revisions will be ₹6,791.24 crore per annum, and the decision will benefit about 50.46 lakh central government employees and 68.27 lakh pensioners.
The calculation is in line with the formula recommended by the 7th Central Pay Commission, which is based on the 12-month average of the All India Consumer Price Index for Industrial Workers (AICPI-IW) published by the Labour Bureau.
For an employee at Level 1 with a basic pay of ₹18,000, the 2% rise translates into an additional ₹360 per month. At Level 10, with a basic pay of ₹56,100, the monthly gain works out to roughly ₹1,122. Since the hike is effective from January 1, employees and pensioners will receive three months of arrears covering January, February, and March as a lump sum alongside their April salaries.
The Confederation of Central Government Employees and Workers (CCGEW) had written to Finance Minister Nirmala Sitharaman on April 8, stating that “severe discontent and apprehensions” existed among employees and pensioners over the delayed declaration. Some employee federations had also pushed for a 3% hike based on specific inflation data points, though the 2% figure is consistent with the government’s rounding-off convention.
This is the first cost-of-living adjustment since the nominal start date of the 8th Pay Commission on January 1, 2026, whose full recommendations are still being drafted. Until the new commission’s framework takes effect, biannual DA revisions under the 7th Pay Commission structure remain the primary salary-relief mechanism for the Centre’s workforce. The National Council-Joint Consultative Machinery (NC-JCM) has separately submitted a proposal seeking a fitment factor of 3.83, which, if accepted, could raise minimum basic pay from ₹18,000 to around ₹69,000.
