The Keralam government has raised Dearness Allowance (DA) for state employees and Dearness Relief (DR) for pensioners by two percentage points, taking the rate to 37%, with the revised amount to be reflected in salaries and pensions disbursed in November 2026. The hike comes against the backdrop of a widening revenue deficit and an unresolved political controversy over whether DA is a statutory right in the state.
The Finance Department’s order takes DA and DR rates from 35% to 37%. The enhanced DA will be paid along with October salaries, disbursed in November, while the revised DR will be paid along with the November pension cycle. A separate order on arrears is pending.
The Finance (Pay Research Unit) Department has also raised DA for teaching staff under the UGC, AICTE and medical education schemes from 58% to 60%, effective with October salaries payable in November, through Government Order (P) No.109/2026/FIN dated 17 October 2026. The 60% rate for UGC and AICTE scale teachers matches the central government DA rate effective from January 2026.
Pensioners will not need to file applications to receive the enhanced DR. The state has said that details of arrears from 1 November will be issued in a follow-up order.
The hike comes as Keralam’s fiscal position remains strained. The state’s total revenue deficit stood at ₹28,227 crore at the end of 2025 and had risen to ₹37,788 crore by November 2026, with projections pointing to ₹42,000 crore by the end of the financial year. A United Democratic Front (UDF) white paper has placed outstanding DA arrears for government employees at about ₹21,670 crore and DR arrears for pensioners at ₹14,387 crore.
The announcement follows a controversy over the state government’s position in the High Court that DA is not a statutory right. The LDF government has cited fiscal stress and Centre-imposed borrowing limits as the context for its stand, while employee unions have continued to press for regular DA disbursal and clearance of arrears.
State DA cycles can diverge from the Centre’s, and compensation structures tied to state service require close monitoring across quarters. The next item on the state employee unions’ agenda is clearance of pending arrears and clarity on the pay-revision cycle, which the state is reportedly considering shifting to a 10-year cadence.
