Cabinet Approves 3% Hike in Dearness Allowance for Central Government Employees and Pensioners.
Move to Benefit Over 1.17 Crore Beneficiaries; Effective from July 1, 2025.
New Delhi:
In a major relief to lakhs of Central Government employees and pensioners amid rising living costs, the Union Cabinet chaired by Prime Minister Narendra Modi has approved an additional instalment of 3% Dearness Allowance (DA) for employees and Dearness Relief (DR) for pensioners. This increase, effective from July 1, 2025, raises the existing DA/DR rate from 55% to 58% of the Basic Pay or Pension.
The decision is aimed at offsetting the impact of inflation and providing financial support to government employees and retired personnel.
According to an official statement released by the Press Information Bureau (PIB), the revised DA/DR will benefit approximately 49.19 lakh Central Government employees and 68.72 lakh pensioners, bringing the total number of beneficiaries to over 1.17 crore.
The increase follows the established formula recommended by the 7th Central Pay Commission, which links DA/DR hikes to inflation indicators such as the Consumer Price Index (CPI).
The financial implication of this 3% hike is estimated to be Rs. 10,083.96 crore annually, a significant budgetary allocation that reflects the government’s commitment to employee welfare and inflation mitigation.
Key Highlights:
- Effective Date: July 1, 2025
- Increase: 3% hike, taking DA/DR from 55% to 58%
- Beneficiaries: 49.19 lakh employees and 68.72 lakh pensioners
- Financial Impact: Rs. 10,083.96 crore annually
- Based on: Recommendations of the 7th Central Pay Commission
This latest increase in DA and DR comes as part of the government’s periodic adjustments to support its workforce and retired personnel in maintaining their purchasing power amidst fluctuating economic conditions.
The move has been widely welcomed by employee unions and pensioners’ associations, who had been advocating for timely revisions in allowances to keep pace with inflation.
With this decision, the government reiterates its commitment to ensuring the economic well-being of those who have served and are currently serving in various Central Government departments.
