DA hike: Could Union Cabinet announce increase today? Here's how much salary jump to expect

DA hike updates: Expectations for a Cabinet announcement of Dearness Allowance (DA) hike for central government employees are high as the Prime Minister Narendra Modi-led meeting gathered today for its likely last session this month.

Increase in DA or Dearness Relief (DR) for more than 49.19 lakh employees and 68.72 lakh pensioners under the January-June cycle has been announced in this month in the past two years — 28 March in 2025, 12 March in 2024.

What is Dearness Allowance / Dearness Relief?

Dearness Allowance or Dearness Relief is a cost-of-living adjustment included in a government employee's salary. It aims to offset inflation and maintain purchasing power.

It comprises a part of the employees and pensioners' basic salary and is updated regularly to account for changes in the cost-of-living index. The rates are usually reviewed and updated twice a year, typically around Diwali in October and Holi in March.

For government employees, their pay includes Basic Pay, DA, House Rent Allowance (HRA), transport allowance (TA), where basic pay comprises 51.5% of the total salary. Further, DA accounts for approximately 30.9%, HRA about 15.4%, and TA some 2.2%, as per a report by Ambit Institutional Securities.

How is DA hike for govt employees calculated?

Dearness allowance is calculated based on the Consumer Price Index (CPI).

For example, if the basic salary is ₹18,000 and the dearness allowance rate is 50%, then the DA amount will be 50% of ₹18,000, which is ₹9,000. This ₹9,000 is added to the basic salary, increasing the total pay to help compensate for rising living expenses, the Ambit Institutional Securities report added.

How much increase in DA could Cabinet approve?

The Centre is likely to hike DA from 58% to 60% of basic pay, with an increase of 2%, based on inflation data from the Labour Bureau's All-India Consumer Price Index for Industrial Workers (CPI-IW), according to a Financial Express report.

If announced today, the revised DA will come into effect from 1 January 2026 with arrears for the past months and increase to reflect in April's salary and pension payouts. Even a 2% hike would provide much needed financial relief for workers and pensioners amid rising costs of essentials and while they await implementation of DA hikes under the 8th Pay Commission.

Who are the beneficiaries?

The DA hikes directly benefit over 1.2 crore of central government employees and retirees — nearly 50 lakh central government employees, including defence personnel; and close to 65 lakh central government pensioners, including defence retirees.

Notably, they represent 0.7% of India’s 60 crore labour force, and nearly 9% of the formal sector, the report added.

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