# Indian States Increase Dearness Allowance Ahead of Diwali Festival Multiple state governments announce DA hikes for employees and pensioners following central cabinet approval. - **Source:** [mint - money](https://www.livemint.com/rss/money) - **Published:** 2026-11-02 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/a889e527-ea87-4231-b829-45b66daf3c51 ## Coordinated State DA Hikes Following the Union Cabinet's decision to raise central government Dearness Allowance to 63%, four Indian states have implemented similar adjustments. Tamil Nadu and Rajasthan increased rates by 3%, while Madhya Pradesh and Chhattisgarh opted for a 2% hike. These revisions aim to provide financial relief to millions of state employees and pensioners. ## Tamil Nadu and Rajasthan Increases Tamil Nadu and Rajasthan both raised their DA rates from 60% to 63%, effective July 1, 2026. In Tamil Nadu, the move benefits 16 lakh employees and pensioners, costing the state ₹1,858 crore annually. Rajasthan's revision covers 12 lakh beneficiaries, with arrears being deposited directly into their General Provident Fund accounts. ## Madhya Pradesh Policy Adjustments Madhya Pradesh announced a 2% DA hike effective from January 2026. The state government plans to clear arrears for the nine-month period between January and September in three equal monthly installments. Starting from October, the revised allowance will be paid in cash as part of the regular monthly salary disbursements for staff. ## Chhattisgarh Implementation Details The Chhattisgarh government increased its DA by 2%, moving the rate from 58% to 60% effective November 1, 2026. This decision impacts approximately 3.85 lakh employees and 1.5 lakh pensioners. The state expects an additional financial burden of ₹36 crore per month, totaling an annual expenditure increase of roughly ₹432 crore for the exchequer. ## Central Government Calculation Formula The Union Cabinet's hike applies specifically to basic pay rather than total gross salary. For a Level 1 employee with ₹18,000 basic pay, the 3% increase results in a ₹540 monthly rise. A Level 5 employee with ₹29,200 basic pay receives an additional ₹876 monthly, reflecting the standard 7th Central Pay Commission formula application. ## Financial Burden and Economic Impact These adjustments represent significant fiscal commitments for state governments during the festive season. Rajasthan alone is allocating an additional ₹820 crore for the DA hike, plus ₹406 crore for ad hoc bonuses. These expenditures are designed to boost disposable income for government workers, directly stimulating local consumption during the Diwali period. ## Administrative and Payment Procedures States are utilizing different payment mechanisms to manage the fiscal impact of these retroactive hikes. While some states are paying arrears in cash installments, others are channeling funds into provident fund accounts. These administrative choices reflect the varying budgetary priorities and cash flow management strategies currently employed by the respective state finance departments. ## Significance of Festive Announcements The timing of these announcements, occurring just before Diwali, serves as a strategic welfare measure for public sector workforces. By aligning these hikes with the festival, states aim to enhance morale and provide immediate financial support. This trend highlights the ongoing reliance on DA adjustments to mitigate the effects of inflation on fixed-income earners. ## Sources covering this story - https://www.livemint.com/money/da-hike-tamil-nadu-madhya-pradesh-rajasthan-chhatisgarh-dearness-allowance-2-3-pc-diwali-emploees-teachers-pensioners-11793585621084.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._