Summary of this article
Cabinet approved 2 per cent hike of DA for central government employees
Pensioners will also receive a rise in dearness relief
The Union Cabinet on April 18, 2026 approved the 2 per cent hike in dearness allowance (DA) for central government employees and pensioners. This hike will offer a decent boost for government employees and pensioners amid rising demand for broader salary revisions.
The hike in DA to 60 per cent from 58 per cent earlier of the basic pay of the employees will be effective retrospectively from January 2026. It will also be available to pensioners. Pensioners will receive a rise in dearness relief (DR), according to a report in The Times Of India. The impact of rise in both DA and DR is expected to impact the exchequer to the tune of Rs. 6,791.24 crore annually. The revision is set to benefit around 5.05 million employees and around 6.83 million pensioners in the central government, as per the official notice.
The government revises the DA and DR twice every year, once in January and the other in July. This is part of the regular compensation revision framework and is intended to offset the inflationary impact and help in preserving standard of living.
DA is an adjustment made on top of the employees’ basic salary to account for the cost of living. This is calculated as a percentage of the basic salary to offset the impact of inflation on their consumption. This is a way to protect the real income of the individuals by ensuring that salary payments will keep up with changes in cost of living.
The hike comes at a time when demands from employee bodies have been rising to ensure broader changes in salary structure proposed under the 8th Pay Commission.
In their memorandum, the National Council-Joint Consultative Machinery (NC-JCM) had sought for a higher fitment factor of 3.83, which could impact the minimum basic pay and raise it to nearly Rs. 69,000 from Rs 18,000, at present. The body had also proposed to expand the definition of ‘family’ to include dependent parents. Along with this, they also suggested a cap of pay disparity, higher inflation-linked allowances and increments.
How will the Change Impact Pensions?
Pensions are linked directly to the last drawn basic pay of the individual. So, when there is a hike in basic pay, then the pension also rises automatically. Family pension, which is also linked to the basic pay rises as well. The DA on pension will also continue.
