Daijiworld Media Network - New Delhi
New Delhi, Oct 28: In a relief to millions during the ongoing festive season, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved an additional instalment of Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners.
The combined annual impact on the exchequer due to the increase in DA and DR will be Rs 10,016.10 crore, according to a Cabinet statement.
The decision will benefit around 48.54 lakh Central Government employees and 68.71 lakh pensioners. Effective from July 1, 2026, the increase of 3 per cent will raise the DA and DR rates from the existing 60 per cent to 63 per cent of Basic Pay and Pension, respectively, to compensate for the impact of rising prices.
The Cabinet said the increase was in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission.
Meanwhile, the 8th Central Pay Commission is holding consultations on matters related to salaries and pensions, with discussions expected to focus on pay conditions and submissions from various stakeholders.
The commission is headed by former Supreme Court judge Ranjana Prakash Desai. Its members include former IAS officer Pankaj Jain, who serves as Member-Secretary, and Pulak Ghosh, a tenured Professor of Finance and member of the Economic Advisory Council to the Prime Minister.
The feedback gathered during the consultations will be among the inputs considered while framing the commission's recommendations. Its work could affect the financial interests of more than one crore employees and pensioners.
The group includes around 50 lakh Central Government employees and approximately 65 lakh pensioners, including defence and railway personnel and retirees.
Employee representatives are seeking a higher fitment factor, which would increase the base used to calculate salaries under the next pay revision.
Unions are also demanding changes to the Dearness Allowance framework, including more frequent revisions and the possible merger of DA with basic pay once a specified threshold is reached.