₹10,083.96 crore annual impact on exchequer
Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw said the move will put an additional burden of ₹10,083.96 crore per annum on the central exchequer. Despite the financial implications, the hike aims to cushion employees and pensioners against the rising cost of living.
The increase will directly benefit 49.19 lakh serving central government employees and 68.72 lakh pensioners. Dearness Allowance applies to working staff, while Dearness Relief is extended to retired personnel, ensuring both groups are protected against inflationary pressures.
Formula based on 7th Pay Commission
The revision follows the formula recommended by the 7th Central Pay Commission, which links DA and DR adjustments to inflation and the Consumer Price Index (CPI). Regular bi-annual revisions help align government salaries and pensions with changes in household expenses.
Recent DA/DR hikes
Earlier this year, the government raised DA and DR by 4% in January 2025. With this fresh revision, employees and pensioners will see cumulative relief of 7% within the calendar year, underscoring the Centre’s commitment to welfare of its workforce amid persistent inflation.
Why DA/DR matters
Dearness Allowance and Relief form a critical component of government pay and pension structures. They are designed to shield beneficiaries from the erosion of purchasing power due to price rise. Analysts note that regular increments in DA/DR not only provide relief to employees but also boost consumer spending, thereby aiding economic growth.
Looking ahead
Experts believe the decision will bring much-needed relief to government employees and retirees ahead of the festive season. With inflationary pressures continuing, further adjustments in DA and DR are likely in early 2026.