Government Hikes Dearness Allowance Amid Inflation Woes

The Cabinet has approved a 2% increase in Dearness Allowance and Dearness Relief for central government employees and pensioners, adjusting the rate from 58% to 60%. Aimed at offsetting inflation, this measure impacts millions of employees and pensioners, reflecting evolving compensation structures amidst rising inflation.

In a significant move to counteract inflationary pressures, the Indian Cabinet has authorized a 2% rise in the Dearness Allowance (DA) for central government personnel. This adjustment elevates the allowance from 58% to 60%, addressing the workforce's prolonged demand for salary recalibration and bringing their compensation in line with inflation.

This amendment, which includes a corresponding increase in Dearness Relief (DR) for pensioners, reflects the government's ongoing commitment to maintaining the purchasing power of its employees. Dearness Allowance, reviewed biannually, aims to mitigate the impact of inflation by revising compensation based on the Consumer Price Index for Industrial Workers (CPI-IW).

The decision impacts approximately 49.19 lakh employees and 68.72 lakh pensioners with an estimated annual financial burden of Rs 10,083.96 crore on the exchequer. This change follows a previous increase in October 2025, signaling a sustained effort by the government to adapt compensation structures to economic conditions.

(With inputs from agencies.)