Industry Odisha Bureau, Oct 29: The Union Government has hiked the Dearness Allowance (DA) and the Dearness Relief (DR) by three percentage points. This has raised the rate from 60% to 63% of basic pay and pension. The revision will take effect retrospectively from July 1, 2026. This will benefit central government employees and pensioners ahead of Diwali.
Notably, DA is paid to serving government employees, while DR is provided to pensioners. Both aim to offset the impact of inflation and help protect purchasing power as the cost of living rises. The rates are generally revised twice a year.
The government calculates DA and DR using the Consumer Price Index for Industrial Workers (CPI-IW), published monthly by the Labour Bureau. Revisions are based on the changes in the 12-month average of the All India Consumer Price Index and follow the accepted formula under the 7th Pay Central Commission.
Previous revision was announced on April 18, 2026. It had raised the DA from 50% to 60%, effective January 1. Prior to which, the three percent point increase in October 2025 had taken the rate from 55% to 58%, effective July 1, 2025.
For employees, the latest hike means a higher monthly allowance calculated against basic pay. For example, an employee with a basic salary of Rs 30,000 will receive Rs 18,900 at DA 63%. This is an increase of Rs 900 per month from the previous Rs 18,000 at 60%.
As per the government, the increase will benefit around 48.54 lakh employees and 68.71 lakh pensioners. The additional annual burden on the exchequer is estimated at Rs 10,016.10 crore.
