The Union Cabinet, led by Prime Minister Narendra Modi, has sanctioned a 2% rise in Dearness Allowance (DA) for central government employees starting from January 1, 2026. This adjustment aims to enhance the take-home pay of employees. The approval includes an additional installment of DA for employees and Dearness Relief (DR) for pensioners, amounting to a 2% increment over the current rate of 58% of the basic pay/pension to counter inflation.
The move will result in an annual impact of Rs 6,791.24 crore on the exchequer. Approximately 50.46 lakh Central Government employees and 68.27 lakh pensioners will benefit from this decision. The increase aligns with the prescribed formula based on the recommendations of the 7th Central Pay Commission.
This decision comes amidst growing calls for pay restructuring as discussions around the proposed 8th Pay Commission gain traction. The National Council–Joint Consultative Machinery (NC-JCM) has advocated for a significantly higher fitment factor of 3.83 in a memorandum submitted to the government. If approved, this adjustment could substantially elevate the minimum basic pay from Rs 18,000 to around Rs 69,000, leading to a notable overhaul in the overall pay structure.
The NC-JCM has put forth various proposals, including a 6% annual increment, two increments upon promotion, with a minimum benefit of Rs 10,000, among other suggestions. These recommendations, if implemented by the new Pay Commission, would impact over 50 lakh central employees and close to 65 lakh pensioners.
