The Union Cabinet has approved a 2% increase in Dearness Allowance (DA), raising it from 58% to 60% of basic pay for central government employees. The revised rate will be effective from January 2026 and will also apply to pensioners through a corresponding increase in Dearness Relief (DR).

The decision is expected to benefit over one crore employees and pensioners across India, offering a modest rise in monthly income amid evolving inflation trends. DA revisions are typically announced twice a year based on movements in the Consumer Price Index for Industrial Workers (CPI-IW). DA Hike Update: Cabinet Approves 2% Increase in Dearness Allowance Ahead of 8th Pay Commission.

How Much Salary Hike Will Employees Receive?

The 2% increase translates into a direct addition to monthly earnings, depending on an employee’s basic salary.

For example:

  • Basic pay: INR 30,000

  • Old DA (58%): INR 17,400

  • New DA (60%): INR 18,000

  • Monthly increase: INR 600

While the hike is relatively moderate compared to previous revisions, it still provides incremental financial relief. 8th Pay Commission: Salary Hike, Fitment Factor, Pension Boost and Latest Updates Explained.

What is Dearness Allowance (DA) and How Is It Calculated?

Dearness Allowance is a cost-of-living adjustment paid to government employees and pensioners to offset the impact of inflation. It is revised twice a year, January and July, based on changes in the CPI-IW index. The percentage is applied to an employee’s basic salary, making it a key component of overall compensation.

The latest hike reflects current inflation trends, which have remained relatively stable compared to earlier periods. As a result, the DA increase is lower than some past revisions that saw larger jumps. However, the steady rise ensures that employees’ purchasing power is partially protected against price increases.

Link to 8th Pay Commission Discussions

The DA revision comes amid growing discussions around the proposed 8th Pay Commission. Employee groups have been pushing for broader changes to salary structures, including a higher fitment factor.

The National Council–Joint Consultative Machinery (NC-JCM) has proposed a fitment factor of 3.83, which, if approved, could significantly raise the minimum basic pay from INR 18,000 to around INR 69,000.

While the 2% DA hike offers only a limited monthly increase, it adds to overall income stability and signals continued alignment with inflation trends. Larger salary revisions, if approved under the next pay commission, could have a more substantial impact on earnings.

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(The above story first appeared on LatestLY on Apr 18, 2026 02:57 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).