# Central Government Dearness Allowance Reaches 63 Percent in 2026 Union Cabinet approves a three-percentage-point hike to offset inflation for employees and pensioners. - **Source:** [mint - money](https://www.livemint.com/rss/money) - **Published:** 2026-10-29 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/81baddf7-5a25-4fc5-871e-6551578cc9a7 ## Latest DA Hike Overview The Union Cabinet approved a three-percentage-point increase in the Dearness Allowance (DA) on October 28, 2026. This adjustment brings the total rate to 63 percent of basic pay. The policy revision aims to provide financial relief to approximately 48 lakh central government employees and 68 lakh pensioners across the country. ## Historical Growth Trajectory Over the past decade, the DA rate has undergone significant structural shifts. Following the 7th Pay Commission implementation in 2016, the rate was reset to 2 percent. Despite a temporary freeze during the 2020 pandemic, the allowance has steadily climbed from 31 percent in 2021 to the current 63 percent level. ## Calculation and Financial Impact The DA is calculated strictly as a percentage of an employee's basic pay, excluding allowances like HRA or transport. For an employee earning a basic salary of 18,000 rupees, the new 63 percent rate results in a monthly increase of 540 rupees. This formula applies consistently across all basic pay brackets. ## Budgetary Implications for Government The combined annual fiscal burden for the government due to the DA and Dearness Relief (DR) hike is estimated at 10,016 crore rupees. This expenditure is necessary to maintain the purchasing power of public sector staff against rising living costs. The government conducts these revisions twice annually, effective January and July. ## Implementation and Arrears The revised DA rate is effective retroactively from July 1, 2026. Consequently, eligible employees and pensioners are entitled to receive arrears covering the period from July to October. For an employee with an 18,000 rupee basic salary, this four-month accumulation totals 2,160 rupees in additional payments beyond their standard monthly salary. ## Structural Policy Framework The government follows a biannual cycle for these adjustments, typically announcing the January revision in March or April and the July revision in October. This systematic approach ensures that salary structures remain aligned with macroeconomic inflation trends, providing a predictable mechanism for adjusting compensation for millions of government personnel nationwide. ## Pensioner Relief Parity The recent policy update extends beyond active employees to include 68 lakh pensioners through a corresponding 3 percent hike in Dearness Relief (DR). By linking DR to the same percentage growth as DA, the government ensures that retirees maintain parity with current staff, mitigating the impact of inflation on fixed pension incomes. ## Economic Significance of Adjustments The consistent rise in DA rates reflects the government's commitment to protecting the real income of its workforce. By indexing compensation to inflation, the state prevents the erosion of purchasing power. This mechanism remains a critical component of public sector employment, ensuring that salary growth keeps pace with broader economic changes. ## Sources covering this story - https://www.livemint.com/money/da-hike-news-10-year-growth-how-central-govt-dearness-allowance-rate-rose-from-2-in-2016-to-63-in-2026-explained-11793288085424.html — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._