📍 New Delhi, October 1, 2025 : In a festive Diwali gift, the Union Cabinet on Wednesday approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners. The decision, effective July 1, 2025, is expected to benefit nearly 1.18 crore beneficiaries, including 49.19 lakh employees and 68.72 lakh pensioners.
Financial Impact
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The hike takes DA/DR from 55% to 58% of basic pay/pension.
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The move entails an annual outlay of ₹10,083.96 crore on the exchequer.
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The increase aims to cushion against inflation, in line with the formula recommended by the 7th Central Pay Commission.
Broader Economic Relief
The announcement comes shortly after the Centre’s GST rate rationalisation, which reduced prices of several mass-consumption items like ghee, butter, paneer, namkeen, jam, ketchup, dry fruits, coffee, and ice creams, as well as aspirational goods like TVs, ACs, and washing machines.
Additional Benefits
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The government also recently cleared a performance-linked bonus for railway employees.
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DA/DR revisions are carried out twice a year — in January and July. The previous hike was announced in March, effective January 1, 2025.
Official Statement
Union I&B Minister Ashwini Vaishnaw briefed the media after the Cabinet meeting, stating:
“This increase reflects the government’s commitment to support employees and pensioners by compensating for the impact of rising prices, especially during the festive season.”
