New Delhi : The Union Cabinet has approved a 3 percent increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, effective from October 1, 2025, ahead of Diwali. The decision aims to protect employees and pensioners from rising inflation and maintain their purchasing power. The hike will be added to the existing DA rate of 55 percent of basic pay or pension.

Approximately 49.19 lakh central government employees and 68.72 lakh pensioners are set to benefit from this move. The increase follows the formula recommended by the 7th Central Pay Commission, which links DA adjustments to the Consumer Price Index for Industrial Workers (CPI-IW).

The total annual financial impact of this DA and DR increase on the government’s budget is estimated

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