Centre raises Dearness Allowance to 60% from January 2026

The Department of Expenditure under the Ministry of Finance issued an Office Memorandum on 22 April 2026 confirming a 2 percentage point increase in Dearness Allowance for central government employees and Dearness Relief for pensioners. With this revision, DA and DR move from 58% to 60% of basic pay, with effect from 1 January 2026. The increase had been cleared by the Union Cabinet earlier in April.

Dearness Allowance is a cost-of-living adjustment paid to government employees to offset the impact of inflation. It is calculated on the basis of the All India Consumer Price Index for Industrial Workers (AICPI-IW), published by the Labour Bureau. The Centre revises DA twice a year, with effect from 1 January and 1 July, although the formal Cabinet decision often comes a few months later, leading to arrear payments.

About 50.46 lakh central government employees and 68.27 lakh pensioners are expected to benefit. Eligible beneficiaries will receive arrears for January, February and March 2026 along with the higher salary or pension from April. The annual additional outgo for the exchequer has been estimated at around Rs 6,791 crore. State governments and PSUs that link their own DA to the central scale typically follow with similar revisions.

Exam angle: Banking and SSC aspirants should memorise the new DA rate (60%), the index used (AICPI-IW), the periodicity (twice a year, January and July), and the agency that publishes the index (Labour Bureau, Ministry of Labour and Employment). UPSC GS-3 questions on inflation linkages and pay commissions also draw on these basics.