Central government employees get three percent dearness allowance hike

Prime Minister Narendra Modi led a central cabinet meeting that approved a three percent increase in dearness allowance and dearness relief for government employees and pensioners. Union Minister Ashwini Vaishnaw announced the decision after the meeting, describing the hike as a Diwali gift from the Prime Minister. This decision benefits forty-eight lakh central employees and sixty-eight lakh pensioners according to Puthiyathalaimurai, while the Dinamalar source notes forty-nine lakh employees and sixty-nine lakh pensioners. The new increase raises the allowance and relief from sixty percent to sixty-three percent of the basic pay and pension.

Implementation And Impact

The three percent hike takes effect retrospectively from July first, 2026. Employees and pensioners will also receive pending arrears for the months of July, August, and September. This financial change creates a fiscal impact of ten thousand sixteen crore rupees for the government. Earlier, the cabinet raised the allowance by two percentage points from fifty-eight to sixty percent starting January first, 2026.

Context

The central government regularly reviews and adjusts dearness allowances twice a year to help employees manage the rising cost of living. Announcing such financial updates around major festive periods like Diwali is a common practice that provides extra spending power to millions of households across the country.