Great news for central government employees and pensioners! The Union Cabinet has approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR), effective from July 1, 2025. This increase raises the DA/DR rate from 55% to 58% of basic pay and pension, providing much-needed relief amidst rising inflation.
Key Details of the DA/DR Hike
| Category | Previous DA/DR Rate | New DA/DR Rate | Effective Date | Estimated Annual Impact |
|---|---|---|---|---|
| Central Govt Employees | 55% | 58% | July 1, 2025 | ₹10,083.96 crore |
| Pensioners | 55% | 58% | July 1, 2025 | ₹10,083.96 crore |
This decision benefits approximately 49.19 lakh central government employees and 68.72 lakh pensioners, aiming to offset the impact of inflation on their incomes.
Arrears to Be Paid in October
Employees and pensioners will receive arrears for the months of July, August, and September 2025 along with their October salary/pension. For instance, an employee with a basic pay of ₹30,000 will see an additional ₹900 per month, totaling ₹2,700 in arrears. Similarly, a basic pay of ₹40,000 will result in an extra ₹1,200 per month, amounting to ₹3,600 in arrears.
Why This Matters
This DA/DR hike is the final revision under the 7th Central Pay Commission, with the 8th Pay Commission set to begin in January 2026. The increase is based on the recommendations of the 7th Central Pay Commission and aims to help employees and pensioners cope with the rising cost of living and inflation.
Additional Support for Pensioners
In addition to the DA/DR hike, the central government has decided to increase the pension for senior citizens and old-age pensioners. Previously, they received ₹400, but this amount has been increased to ₹1,100, effective from July 11, 2025, to help them cope with inflation. The increased amount will be sent directly to the pensioners’ accounts
Festive Cheer Ahead of Diwali
This timely increase in DA/DR and pension is a festive gesture aimed at boosting the financial well-being of government employees and pensioners ahead of Diwali. The combined impact on the exchequer is estimated at ₹10,083.96 crore per annum, reflecting the government’s commitment to supporting its workforce during the festive season.