DA hike: Kerala mulls 2% increase in Dearness Allowance by August for extra salary during Onam festivities

DA hike: Kerala is considering a 2% increase in Dearness Allowance (DA) for state government employees to be disbursed in their August salaries, ahead of Onam festivities, according to a report by Mathrubhumi.

According to official estimates, this move could cost the state exchequer nearly ₹60 crore in additional expenditure. Onam is during the last week of August this year.

The publication added that the move is aimed at providing financial relief and boosting pay for state government employees ahead of the Onam festival in Kerala. It cited available information to report that the additional DA benefit could be disbursed with salaries in August 2026.

An official order is awaited, but the announcement is expected to be an Onam “gift” for state government employees, it added.

DA hikes announced: Finance Ministry hikes DA by 2%

Notably, this comes after the Ministry of Finance, in April, revised DA and dearness relief (DR) by 2% for central government employees and pensioners with effect from 1 January this year. This effectively takes the component up from 58% to 60% of Basic Pay. Revised biannually in line with the All-India Consumer Price Index (AICPI), new DA announcements are made in March and October, followed by rollouts in January and July.

Later in May, the Indian Banks' Association (IBA) announced revised DA and DR for workmen and officer employees across levels for the months of May, June and July 2026. It hiked basic salaries between ₹48,000 and ₹1,17,000 and DA from ₹435 to ₹1,050.

This was followed by a 2% DA and DR hike announced by the Indian Railways. The Railway Board said DA and DR have been revised for lakhs of employees, pensioners, family pensioners, and other eligible beneficiaries covered under the 7th Pay Commission framework.

Dearness Allowance: Why is it significant?

A component of the basic salary, DA aims to mitigate cost-of-living expenses for central government employees, public sector staff, defence personnel, bank employees, and pensioners. Assam, Arunachal Pradesh, Bihar, Odisha, Tamil Nadu, West Bengal and Uttar Pradesh have announced DA hikes, while states including Himachal Pradesh and Punjab are also considering the same.

DA hikes are significant as they increase salary for around 50 lakh central government employees and payout for about 65 lakh retired central government pensioners, including defence and railway staff and retirees.

List of states considering DA hikes

• The Punjab government, on 30 May, said it will consider payment of pending DA and DR dues to state government employees (across categories) and pensioners for the period between 1 July 2021 and 31 March 2024. It added that a sub-committee will discuss payment of arrears for employees and pensioners based on revised salary and pension benefits for the period between 1 January 2016 and 30 June 2021.
• The Himachal Pradesh government is reviewing DA and pending arrears for state employees and pensioners, Chief Minister Sukhvinder Singh Sukhu said. The Finance Department has been directed to withdraw its notice regarding the deferment of salaries and release the pending pension arrears. Sukhu called government employees the backbone of the state, and said the government remained committed to safeguarding their welfare and interests.