DA, DR hiked by 3% for govt employees; cabinet announces big bonanza before Diwali

New Delhi: The central government employees who have been eagerly anticipating the announcement on July 2026 DA hike have got a big boost before Diwali. The cabinet has announced to hike Dearness Allowance (DA) and Dearness Relief (DR) by 3 percent from existing 60 percent. With the latest round of hike, the Dearness Allowance for government employees now stands at 63 percent.

Central government employees will get the increased DA hike in their salary along with six months of arrears from January 2026.

"The Union Cabinet chaired by the Prime Minister Shri Narendra Modi today has approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.07.2026 representing an increase of 3% over the existing rates of 60% of the Basic Pay/Pension, to compensate against price rise," said a Cabinet note.

The combined impact on the exchequer on account of increase in both Dearness Allowance and Dearness Relief would be Rs.10,016.10 crore per annum.  This will benefit about 48.54 lakh Central Government employees and 68.71 lakh pensioners.

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

AICPI-IW August 2026

The DA hike is based on the All India Consumer Price Index for Industrial Workers (AICPI-IW) figures. As per the Ministry of Labour and Employment's data, the AICPI-IW for August 2026 was at 154.4, up 1.2 points from 153.2 in July.

Bonus worth Rs 2,010 crore for over 11.40 lakh railway employees

The Union Cabinet on October 14 approved a productivity-linked bonus (PLB) for 78 days, amounting to Rs 2,009.61 crore, to 11,40,770 railway employees. The maximum amount payable per eligible railway employee is Rs 17,951 for 78 days, in recognition of the excellent performance by the Railway staff.

The amount will be paid to various staff categories, like track maintainers, loco pilots, train managers (guards), station masters, supervisors, technicians, technician helpers, points men, ministerial staff, and other Group 'C staff.

According to the Cabinet, the PLB payment to eligible railway employees is made each year before the Durga Puja/Dusshera holidays.