New Delhi: The Union Cabinet on Wednesday (October 1, 2025) increased Dearness Allowance (DA) and Dearness Relief (DR) by 3% for about 49.19 lakh central government employees and 68.72 lakh pensioners. The DA/DR increase of 3% over the existing rate of 55% of the basic pay/pension to compensate against the price rise is effective July 1, 2025. The combined impact on the exchequer on account of an increase in DA and DR will be ₹10,083.96 crore per annum, I&B Minister Ashwini Vaishnaw said while briefing on decisions taken in the Cabinet meeting. The increase is in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission.

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