As Diwali lights start brightening homes across India, the Union Cabinet has approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR). This move comes as a much-needed festive bonus for millions of Central government employees and pensioners. The DA/DR rate will rise from 55% to 58% of basic pay and pension, providing financial relief just in time for India’s biggest festival.
This increase is retrospective from 1st July 2025, meaning employees and pensioners will receive arrears for July, August, and September along with their October salary.
DA/DR Hike Impact on Salary
| Basic Pay | 3% DA Increase | Arrears for 3 Months | New Monthly Salary (Approx.) |
|---|---|---|---|
| ₹30,000 | ₹900 | ₹2,700 | ₹30,900 |
| ₹40,000 | ₹1,200 | ₹3,600 | ₹41,200 |
| ₹50,000 | ₹1,500 | ₹4,500 | ₹51,500 |
This increase helps households manage festival expenses, from gifts to home renovations, easing inflationary pressures during a busy spending season.
Who Will Benefit?
The 3% DA/DR hike will benefit:
- 48 lakh Central government employees
- 68 lakh pensioners, including family pensioners
- Those governed by the 7th Pay Commission guidelines
This hike is especially significant for retired individuals and pensioners, providing crucial support against rising prices.
Understanding DA & DR
Dearness Allowance (DA) and Dearness Relief (DR) are allowances designed to protect salaries and pensions from inflation:
| Allowance Type | Who Gets It | Reviewed | Basis for Revision |
|---|---|---|---|
| DA | Employees | Twice a year (Jan & July) | CPI-IW (Consumer Price Index for Industrial Workers) |
| DR | Pensioners | Twice a year (Jan & July) | CPI-IW |
Even though revisions are announced months later, arrears are paid so recipients do not lose money due to delays.
Festive Timing: Why It Matters
The Diwali season is marked by high spending on celebrations, gifts, and home improvements. This timely DA/DR hike:
- Provides extra funds for households
- Helps families maintain festive cheer without financial stress
- Boosts disposable income for households with multiple government employees or pensioners
Final Revision Under 7th Pay Commission
This 3% hike is considered the last revision under the 7th Pay Commission. From January 2026, the 8th Pay Commission is expected to implement new pay scales, allowances, and pension structures, giving employees hope for further financial benefits.
How to Calculate Your DA Increase
To calculate your personal DA benefit:
Formula: Basic Pay × 3%
| Basic Pay | DA Increase per Month | Arrears for 3 Months |
|---|---|---|
| ₹30,000 | ₹900 | ₹2,700 |
| ₹40,000 | ₹1,200 | ₹3,600 |
| ₹50,000 | ₹1,500 | ₹4,500 |
Additional Information:
- Effective Date: 1st July 2025
- Disbursement Month: October 2025
- Applicable for: Central Government Employees & Pensioners
This DA hike ensures that employees and pensioners enjoy a more financially comfortable Diwali season and manage rising living costs effectively.