Dearness Allowance: Indian Railways hikes DA for employees by 2% effective from 1 January — Here's all you need to know

The Indian Railways (IR) has revised dearness allowance and dearness relief for employees and pensioners by 2%, effective from 1 January 2026, thereby taking the component to 60% of basic pay from 58% earlier.

DA and DR are percentages of employees' and pensioners' basic salary and pension, designed to help mitigate the increased cost of living. This allowance is typically revised twice annually to reflect inflation fluctuations in the cost-of-living index by the All-India Consumer Price Index (AICPI).

In two notifications, 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 Central Pay Commission (CPC) framework. Notably, Indian Railways is among the largest public sector employers in India.

Railways hikes DA by 2% wef from 1 January — key highlights

In the notification issued by the Railway Board titled ‘Grant of Dearness Allowance to Railway employees - Revised Rates effective from 01.01.2026’, the Railway Ministry said that its 2% hike has been approved by President Droupadi Murmu.

• “The Dearness Allowance payable to Railway employees shall be enhanced from the existing rate of 58% to 60% of the Basic Pay with effect from 1st January 2026,” it stated.
• It added that ‘Basic Pay’ in the revised pay structure means the pay drawn in the prescribed level in the Pay Matrix as per 7th CPC recommendations accepted by the government, but does not include any other type of pay, such as special pay.

• DA will continue to be a distinct element of remuneration and will not be treated as pay, it added.
• “The payment on account of DA involving fractions of 50 paise and above may be rounded to the next higher rupee and the fractions of less than 50 paise may be ignored,” as per the notification.
• A similar notification was issued for DR increase for railway pensioners.

Finance Ministry increases DA by 2%

Earlier on 22 April, the Finance Ministry announced 2% hike in DA for central government employees, w.e.f. 1 January 2026, adding that the Defence and Rail ministries would issue separate orders for their personnel and employees, respectively.

The Department of Expenditure's memo stated that DA payable shall be increased from 58% to 60% of basic pay, where basic pay is the salary drawn in the prescribed level in the Pay Matrix as per 7th CPC and payments to be rounded off to the next higher rupee involving fractions of 50 paise.

Notably, as many as 50 lakh central government employees and around 65 lakh retired central government pensioners benefit from DA hikes.

IBA hikes bank employees' DA for May, June and July 2026

The Indian Banks' Association (IBA) on 2 May said it has revised DA for bank employees for the months of May, June and July 2026. The hike will increase salaries for workmen and officer employees across levels. Thus, for basic salaries between ₹48,000 and ₹1,17,000, the DA increase ranges from ₹435 to ₹1,050.

The IBA notice stated that for employees under XII BPS/9th Note, the increase is as per the All-India Average Consumer Price Index for Industrial Workers (AIACPI-IW) for the quarter ended March 2026. It added that the average CPI for the three months is 148.73, which works out to a 25.70 differential over the 123.03 baseline (CPI 2016), which brings the increase for May, June and July 2026 to 0.70 points (148.73 - 123.03 = 25.70).

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