India raises central DA and pension relief to 63%, with increases due from July 1

Cabinet decision covers more than 11.7 million people

India's Union Cabinet approved a rise in Dearness Allowance and Dearness Relief from 60% to 63% of basic pay or pension on October 28, 2026, giving about 48.54 lakh central government employees and 68.71 lakh pensioners an increase effective from July 1. The combined annual cost to the government is estimated at Rs 10,016.10 crore.

Information and Broadcasting Minister Ashwini Vaishnaw announced the decision after the Cabinet meeting chaired by Prime Minister Narendra Modi, ahead of Diwali. Together, the beneficiary figures amount to 117.25 lakh people, or 11.725 million.

The change adds Rs 540 a month for an employee with basic pay of Rs 18,000 and Rs 600 for a retiree with a basic pension of Rs 20,000. Because the revision takes effect from July, eligible employees and pensioners are also entitled to the difference accumulated before the higher rate reaches their payments.

Gujarat and Uttarakhand subsequently approved increases to the same 63% rate for eligible state personnel. Their decisions include arrangements for paying arrears, the money owed for earlier months, while the central announcement did not specify a payment date for its revised allowances or arrears.

The central increase follows the accepted formula under the Seventh Central Pay Commission. Meanwhile, the Eighth Central Pay Commission is examining broader changes to pay and pensions, a separate exercise that could reshape basic pay rather than simply adjust the allowance paid alongside it.

For households, the immediate calculation is straightforward: every Rs 1,000 of eligible basic pay or basic pension brings an additional Rs 30 a month under the latest revision. The amount received therefore depends on the person's basic pay or pension.

What a rise from 60% to 63% means

Dearness Allowance, usually called DA, is an amount paid alongside basic salary to help government employees meet rising living costs. Dearness Relief, or DR, serves the same purpose for eligible pensioners. Both are calculated as a percentage of the relevant basic amount.

The latest increase is three percentage points. An employee previously receiving Rs 60 in DA for every Rs 100 of basic pay will now receive Rs 63. The extra payment equals 3% of basic pay, while the DA component itself rises by 5%, because three is 5% of the previous rate of 60.

Basic pay stays the same under this decision. For someone earning Rs 18,000 in basic pay, the combined basic pay and DA rises from Rs 28,800 to Rs 29,340. That is an increase of 1.875% in those two components together. Other allowances and deductions affect the final amount paid.

The Cabinet's statement linked the adjustment to inflation. Describing the purpose of the additional instalment, it said the increase was intended:

to compensate against price rise.

How much employees and pensioners gain

Employees can calculate the monthly addition by multiplying their basic pay by three and dividing by 100. The same calculation applies to basic pension for eligible retirees.

• Rs 18,000 basic pay: DA rises from Rs 10,800 to Rs 11,340, an additional Rs 540 a month or Rs 6,480 over 12 months.
• Rs 25,000 basic pay: DA rises from Rs 15,000 to Rs 15,750, an additional Rs 750 a month or Rs 9,000 over 12 months.
• Rs 40,000 basic pay: DA rises from Rs 24,000 to Rs 25,200, an additional Rs 1,200 a month or Rs 14,400 over 12 months.
• Rs 50,000 basic pay: DA rises from Rs 30,000 to Rs 31,500, an additional Rs 1,500 a month or Rs 18,000 over 12 months.

Adhil Shetty, chief executive of BankBazaar, gave examples for employees at two levels of the central pay structure:

At Level 3 and Level 8, basic pay of ₹21,700 and ₹47,600 respectively, the increase adds ₹651 and ₹1,428 a month, with arrears due separately.

A pensioner with a basic pension of Rs 20,000 will receive DR of Rs 12,600 instead of Rs 12,000, gaining Rs 600 a month. At a basic pension of Rs 30,000, DR rises from Rs 18,000 to Rs 18,900, an additional Rs 900 before applicable deductions or adjustments.

July entitlement and the sequence of decisions

July 1 is the date from which the new central rate applies, even though the Cabinet approved it in October. Arrears cover the difference between the old and new rates for the eligible period before payments are updated.

For an employee whose eligible basic pay remained Rs 25,000 throughout July to October, four months of the additional Rs 750 would total Rs 3,000. A pensioner with an unchanged basic pension of Rs 20,000 would accumulate Rs 2,400 over the same four months. These are illustrations based on a constant basic amount.

• March 28, 2025: The Centre approved an earlier two percentage point increase, taking DA and DR from 53% to 55%.
• April 2026: A further two percentage point increase was announced, bringing the rate to 60%.
• June 15, 2026: The extended deadline fell for submitting memoranda and suggestions to the Eighth Central Pay Commission.
• July 1, 2026: The latest central DA and DR revision became effective.
• October 28, 2026: The Union Cabinet approved the increase from 60% to 63%.
• November 4, 2026: Gujarat announced its corresponding increase and arrangements to pay July to October arrears with November salary and pension.

The Centre generally revises DA and DR with effect from January and July. Approval and payment can come later, creating a gap between the date an entitlement begins and the date the money arrives.

Inflation data behind the adjustment

The allowance formula uses the All India Consumer Price Index for Industrial Workers, known as AICPI-IW. This index tracks changes in the prices of goods and services bought by industrial worker households and provides the inflation measure used in the DA calculation.

The index rose by 1.2 points to 154.4 in August 2026, then reached 155.5 in September. The August reading was cited in expectations of a July revision of three to four percentage points; the Cabinet ultimately approved three.

The January 2027 DA and DR revision will use the average of the index readings from January through December 2026. A monthly index reading is one part of that calculation. The full average supplies the figure needed for the prescribed formula.

The Cabinet statement identified the existing pay commission framework as the basis for the approved increase:

This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

Who is covered and what the increase costs

The government's approved estimate covers 48.54 lakh employees and 68.71 lakh pensioners. An estimate published before the decision had put the potential beneficiary count at nearly 55 lakh employees and around 69 lakh pensioners; the Cabinet announcement gives the figures attached to the approved measure.

Pensioners account for about 58.6% of the combined 117.25 lakh beneficiaries, calculated from the government's two figures. The decision therefore reaches more retirees than serving employees.

The annual additional cost of Rs 10,016.10 crore is higher than the Rs 6,614.04 crore estimated for the two percentage point revision approved in March 2025. The latest annual estimate is Rs 3,402.06 crore larger, about 51% above the earlier amount, alongside an increase of three percentage points rather than two.

Personnel remaining on older central pay scales have different allowance rates. For the Sixth Central Pay Commission scale, DA and DR rise from 262% to 269% of basic pay or pension, an increase of seven percentage points from July 1. Under the Fifth Central Pay Commission scale, the rate rises from 483% to 497%, an increase of 14 percentage points from the same date.

Each percentage operates on the basic pay or pension defined by its own pay structure. The applicable scale is therefore essential when calculating an individual's entitlement.

Gujarat and Uttarakhand set out state payments

Gujarat's cabinet, chaired by Chief Minister Bhupendra Patel, approved a rise from 60% to 63%, effective July 1. Government spokesperson Jitu Vaghani announced that approximately 4.62 lakh employees and 5.07 lakh pensioners would benefit, a combined 9.69 lakh people.

Gujarat will pay the July to October difference in a single instalment with November salary and pension. The state estimates arrears expenditure of Rs 523 crore and an additional annual cost of Rs 1,569 crore. The arrears figure equals four months of the stated annual cost.

Uttarakhand Chief Minister Pushkar Singh Dhami also approved an increase to 63% from July 1. Coverage extends to eligible state employees and personnel in local bodies, aided educational institutions, state universities and technical educational institutions, including those receiving University Grants Commission pay scales.

Uttarakhand's Chief Minister's Office said the difference for July 1 to October 31 would be paid in cash as arrears. State governments decide their own revisions; a central increase applies to central personnel, while state employees depend on decisions made by their respective governments.

West Bengal employees press their claims

West Bengal employees receive DA at 38%, compared with the new central rate of 63%. The numerical gap is 25 percentage points, following an increase in the state's rate from 18% to 38%.

West Bengal employees remain under the state's Sixth Pay Commission structure, ROPA 2019, while the central 63% rate applies under the Seventh Central Pay Commission framework. Monthly entitlements must be calculated using the basic pay attached to each structure.

The Sangrami Joutha Mancha is leading protests as employee representatives seek pending DA dues. Employees are also pursuing legal cases. The latest central increase adds to the pressure surrounding those demands, while the amount payable to state employees continues to depend on the state's rules and decisions.

What the Eighth Pay Commission is considering

The Eighth Central Pay Commission is chaired by former Supreme Court judge Ranjana Prakash Desai. Former Indian Administrative Service officer Pankaj Jain serves as member secretary, and finance professor Pulak Ghosh, a member of the Prime Minister's Economic Advisory Council, is also on the panel.

The commission is examining submissions on salary, pensions, retirement benefits and service conditions. Its consultation process included an extension of the deadline for memoranda and suggestions to June 15, 2026.

Employee groups have proposed fitment factors ranging from 2.28 to 3.83, with some seeking five or more. A fitment factor is the multiplier used to convert existing basic pay or pension into a revised basic amount. Under the Seventh Pay Commission, a factor of 2.57 accompanied the rise in minimum basic pay from Rs 7,000 to Rs 18,000.

The Eighth Commission is expected to submit recommendations around mid-2027, with expectations of possible retrospective implementation from January 1, 2026. Its final multiplier, revised minimum pay and implementation arrangements remain undecided and will depend on its recommendations and government approval.

The immediate entitlement is the approved DA and DR increase under the existing framework. Any later revision of basic pay would require its own calculations and implementation orders.

Other Cabinet approvals carry different spending schedules

The October Cabinet decisions also included a Rs 10,000 crore Container Manufacturing Promotion Scheme, with funding extending through the financial year ending in 2040. The scheme aims to develop a globally competitive container manufacturing industry in India.

The Khelo India Sports Goods Manufacturing Scheme received an outlay of Rs 1,856 crore for financial years 2026-27 through 2033-34. Its measures include manufacturing zones, investment support, assistance tied to turnover, help for existing industrial clusters, testing, certification, research and skills development.

The Cabinet allocated Rs 7,395 crore to the Pradhan Mantri Viksit Gram Swaraj Yojana for 2026-27 through 2030-31. It covers states and Union Territories, including rural local governance institutions outside the Constitution's Part IX framework, and focuses on stronger local planning and institutional capacity.

Together with the annual DA and DR cost, these announced amounts total approximately Rs 29,267 crore. Their spending periods differ: the allowance figure is a recurring annual estimate, while the three scheme allocations extend across several years.

Key Points

• Central DA and DR rise from 60% to 63%, effective July 1, 2026, following Cabinet approval on October 28.
• The government estimates coverage of 48.54 lakh employees and 68.71 lakh pensioners, with an annual additional cost of Rs 10,016.10 crore.
• The monthly increase equals 3% of eligible basic pay or basic pension, with the applicable difference owed retrospectively.
• Gujarat will pay July to October arrears with November salary and pension; Uttarakhand also approved arrears for that period.
• The January 2027 revision will use average AICPI-IW readings for January through December 2026.
• The Eighth Pay Commission is considering broader changes to pay and pensions, with recommendations expected around mid-2027.