The Cabinet on Wednesday (October 28, 2026) approved a 3% hike in dearness allowance and dearness relief, benefiting over 1.17 crore central government employees and pensioners.
The increase will be effective from July 1, 2026. The decision will benefit 48.54 lakh employees and 68.71 lakh pensioners. The Cabinet also approved the Container Manufacturing Promotion Scheme (CMPS) with a budgetary outlay of Rs 10,000 crore up to FY40 to promote a globally competitive container manufacturing ecosystem in India.
Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw said the Union Cabinet headed by Prime Minister Narendra Modi has taken the decision to increase the DA and DR ahead of Diwali.
Mr. Vaishnaw called it a paradigm shift from prescription-based schemes to a model focused on capacity building and planning at the local level. The increase follows the accepted formula based on the recommendations of the Seventh Pay Commission. It functions specifically to offset the impact of inflation on fixed incomes. The allowance is calculated as a percentage of the basic pay and undergoes periodic revisions based on established inflation indices to maintain the purchasing power of the workforce.
Meanwhile, the government allocated ₹7,395 crore to the Pradhan Mantri Viksit Gram Swaraj Yojana. Earlier reporting noted: Dearness Allowance For Government Employees Hiked By 3% Ahead Of Diwali Dearness Allowance For Government Employees Hiked By 3% Ahead Of Diwali Dearness Allowance For Government Employees Hiked By 3% Ahead Of Diwali Earlier reporting noted: The Union Cabinet on Wednesday (October 28) approved three per cent increase in the dearness allowance (DA) and dearness relief (DR) for government employees and pensioners – taking it from 60 to 63 per cent of the basic pay. The increase comes more than a week before Diwali and will be applicable from July 1 this year. About 48 lakh central government employees and 68 lakh pensioners will benefit from the hike.
Earlier reporting noted: Dearness Allowance is a fundamental cost-of-living adjustment designed to support government employees and pensioners.
