New Delhi: The Union Cabinet on Wednesday cleared a 3 per cent hike in dearness allowance (DA) and dearness relief (DR) for central government employees and pensioners, raising the rate from 60 per cent to 63 per cent of basic pay and pension. The decision, taken at a meeting chaired by Prime Minister Narendra Modi, will take effect retrospectively from 1 July 2026 and will benefit about 48 lakh employees and 68 lakh pensioners — more than 1.17 crore people in all.
The increase, announced by Information and Broadcasting Minister Ashwini Vaishnaw after the Cabinet briefing, will cost the exchequer an estimated Rs 10,016 crore a year. It is the second DA revision of the year and follows the established pattern of twice-yearly adjustments linked to the All India Consumer Price Index for Industrial Workers, which tracks the cost of living for working families across the country.
For employees drawing pay under the Seventh Central Pay Commission, DA will now stand at 63 per cent of basic pay. The Cabinet also approved corresponding revisions for pensioners and for staff covered by older pay commissions. DA for Sixth Pay Commission employees rises from 262 per cent to 269 per cent, while for Fifth Pay Commission employees it moves from 483 per cent to 497 per cent, ensuring that retired staff on older scales are not left behind.
Government sources described the timing, ahead of Diwali, as a festive-season relief measure for serving staff and pensioners alike. The arrears for the months from July onwards will be paid along with the revised salary and pension, giving households a lump-sum boost at a time when household budgets remain under pressure from food and fuel prices. For pensioners, many of whom depend entirely on their monthly pension, even a three-percentage-point revision translates into a meaningful addition to fixed incomes.
The Cabinet’s decisions went well beyond the DA revision. In a significant push for domestic manufacturing, it approved a Rs 10,000 crore Container Manufacturing Promotion Scheme aimed at building India’s capacity in container production, a sector where the country has long depended on imports. The scheme is expected to support local manufacturers, create jobs and strengthen the logistics backbone that underpins India’s export trade.
A second manufacturing initiative, the Rs 1,856 crore Khelo India Sports Goods Manufacturing Scheme, targets the sports goods industry, much of it concentrated in small and medium enterprises. The scheme seeks to upgrade technology, improve quality and help Indian sports goods compete in global markets, while also linking manufacturing growth to the wider Khelo India push for sporting culture and grassroots participation.
The third major approval was the Rs 7,395 crore PM Viksit Gram Swaraj Yojana, a rural development programme focused on strengthening village-level governance and infrastructure. Together, the three schemes represent a combined outlay of Rs 19,251 crore, signalling that the government is pairing immediate relief for its workforce with longer-term investment in manufacturing and rural India.
Taken together, the Cabinet’s decisions reflect a familiar balancing act: cushioning serving and retired employees against inflation while channelling public funds into sectors the government believes will generate employment and reduce import dependence. For the 1.17 crore beneficiaries, the DA hike itself is the headline. For industry and rural India, the schemes approved alongside it may prove the more consequential part of Wednesday’s meeting.
