The Union Cabinet on Wednesday approved a three per cent increase in Dearness Allowance and Dearness Relief for central government employees and pensioners, effective from July 1, 2025. Union Minister Ashwini Vaishnaw described the decision as a festive gift for staff ahead of Dussehra and Diwali.
With this hike, the DA will rise from 55 per cent to 58 per cent of basic pay. For example, a government employee drawing a basic salary of ₹60,000 will now receive ₹34,800 as DA, compared to ₹33,000 earlier. The increase is expected to benefit nearly 50 lakh employees and more than 65 lakh pensioners, putting extra money in their hands during the festival season.
This is the second revision this year. In March, the government announced a two per cent hike, while in October last year, it had raised DA by three per cent. These periodic revisions are linked to the Consumer Price Index for industrial workers, which reflects inflation and cost-of-living changes. DA applies to serving employees, while DR is given to pensioners.
The announcement comes at a time when the Eighth Pay Commission is preparing to overhaul government pay structures. The commission, which was announced in January, is expected to implement changes from January 1, 2026. The new pay scales will depend on the fitment factor, a multiplier applied to basic pay, which experts believe could be in the range of 1.83 to 2.86. This could result in salary increases of 13 to 34 per cent. Once the new structure is in place, DA will reset to zero and merge with the revised basic pay, a practice that was also followed after the recommendations of the Seventh Pay Commission.
Economists say the DA hike will not only provide relief to government staff and pensioners at a time of rising prices but will also give a push to consumer demand during the festive season, especially in sectors like retail and consumer goods.
