Cabinet Clears 3% DA Hike from July
The Union Cabinet has approved an additional 3% hike in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, effective July 1, 2025. This raises the DA/DR rate from 55% to 58% of basic pay or pension.
Who Will Benefit
The hike will benefit about 49.19 lakh central government workers and 68.72 lakh pensioners. The decision is aimed at easing the burden of rising inflation and providing relief ahead of the festive season.
Financial Impact and Arrears
The annual fiscal impact of this increase is estimated at ₹10,083.96 crore. Arrears for the period from July to September 2025 will be paid along with the October salary, giving employees and pensioners a festive boost.
Context and Next Steps
This is the second DA/DR hike in 2025; the previous increase of 2% was granted in March. Officials indicated that this could be the final DA revision under the 7th Pay Commission, with the 8th Pay Commission expected to take effect from January 2026.
