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National Cabinet decision Economy & Banking Polity & Governance

Union Cabinet raises dearness allowance by 3 percentage points

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a rise of 3 percentage points over the existing rate of 60 per cent in the dearness allowance paid to central government employees and the dearness relief paid to pensioners. The increase takes effect from 1 July 2026. The combined annual financial implication is Rs 10,016.10 crore. About 48.54 lakh central government employees and 68.71 lakh pensioners will benefit. The revision follows the formula approved on the recommendations of the 7th Central Pay Commission.

Increase: 3 percentage points over 60 per cent Effective from: 1 July 2026 Annual financial implication: Rs 10,016.10 crore Employees and pensioners: 48.54 lakh and 68.71 lakh
Why it matters for exams: Dearness allowance revisions are decided by the Union Cabinet on the formula of the 7th Central Pay Commission -- a standing Polity and Economy fact.
Kerala PSCUPSC
28 October 2026 Source: Press Information Bureau

In plain words

DA Dearness Allowance — A cost-of-living component of pay for serving employees.

DR Dearness Relief — The same cost-of-living component paid to pensioners.

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