The Cabinet on Saturday approved a 2 per cent increase in Dearness Allowance (DA) and Dearness Relief (DR) for Central government employees and pensioners, taking the rate to 60 per cent of basic pay, Union minister Ashwini Vaishnaw announced.The hike will be effective from January 1, 2026, and is expected to benefit about 50.5 lakh employees and 68.3 lakh pensioners. The annual financial implication of the decision is estimated at Rs 6,791 crore.The DA for central government employees was last revised in October, when it was increased from 55 per cent to 58 per cent. That hike was made effective from July 1, 2025, and was later implemented with arrears, benefiting both serving employees and pensioners.The government revises Dearness Allowance (DA) and Dearness Relief (DR) twice a year, in January and July, as part of its regular compensation framework for employees and pensioners. These adjustments are meant to offset the impact of inflation and help preserve purchasing power.Dearness Allowance is a cost-of-living adjustment paid to government employees, calculated as a percentage of basic pay to help salaries and pensions keep pace with rising prices.The latest move comes amid wider demands from employee bodies for major changes under the proposed 8th Pay Commission.In its memorandum, the National Council-Joint Consultative Machinery (NC-JCM) had sought a fitment factor of 3.83, which could raise the minimum basic pay from Rs 18,000 to about Rs 69,000.It has also proposed expanding the definition of “family” for pay calculations to include dependent parents, along with a cap on pay disparity, higher increments and inflation-linked allowances.Meanwhile, the Cabinet is also said to have approved a Sovereign Maritime Fund with a corpus of about Rs 13,000 crore to provide stable and affordable insurance cover for Indian-flagged, India-bound and India-originating vessels.It is also learnt to have extended the Pradhan Mantri Gram Sadak Yojana (PMGSY) till 2028, with an additional allocation of Rs 3,000 crore.
