In a major announcement for millions of government personnel and retirees, the Union Cabinet officially approved a 3% increase in Dearness Allowance (DA) and Dearness Relief (DR) on Wednesday, October 1, 2025. This much-anticipated decision is set to positively impact a vast population, including approximately 49.19 lakh central government employees and 68.72 lakh pensioners.
This latest hike, which adds 3% to the existing rate of 55% of the basic pay or pension, is specifically designed to help mitigate the ongoing impact of inflation and increasing living expenses. The revised rates will be implemented retroactively from July 1, 2025, providing immediate financial relief.
Information & Broadcasting Minister Ashwini Vaishnaw, while briefing the media on the Cabinet’s key decisions, stated that the combined financial burden of this increase in DA and DR on the national exchequer will be a substantial ₹10,083.96 crore per annum.
This adjustment is consistent with the accepted formula and adheres to the recommendations provided by the 7th Central Pay Commission, ensuring a fair and systematic approach to compensating central government employees and pensioners for economic shifts.