India hikes dearness allowance for central government employees by 3%

The Union Cabinet has greenlit a 3% hike in dearness allowance (DA) for central government employees, providing relief to millions of federal workers amid persistent inflation concerns. The increase, which takes effect from October, comes as a significant boost to government personnel ahead of the festival season.

The decision was made during a Cabinet meeting that reviewed cost-of-living adjustments for central employees. Under the new rate, eligible government staff will see their October salary packages increase, translating into improved household finances for federal workers across the country.

According to government estimates, the dearness allowance revision will impose an additional fiscal burden of ₹10,016 crore on the Union Budget. The outgo covers salary adjustments, pension payments, and related administrative costs for the approximately 48 lakh central government employees and over 65 lakh pensioners who are eligible for DA.

The DA hike represents the government's periodic adjustment mechanism to protect employee purchasing power against inflationary pressures. These revisions are typically implemented twice annually—in January and July—based on inflation indices compiled by the Labour Bureau. The current increase follows earlier adjustments made to cushion federal employees and retirees from rising costs of essential commodities and services.