The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved an increase in the Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners, respectively. The revision raises the rate by 3 per cent, from 55 per cent to 58 per cent of basic pay or pension, effective from July 1, 2025.
Financial impact and beneficiaries
According to an official statement, the combined impact of the increase on the exchequer is estimated at ₹10,083.96 crore per annum. The move will benefit approximately 49.19 lakh central government employees and 68.72 lakh pensioners.As per a report by The Economic Times, Union Minister Ashwini Vaishnaw noted that the revision is intended to compensate for price rises. The increase follows the accepted formula based on recommendations of the 7th Central Pay Commission.
Effect on salaries and pensions
The DA for central government employees is calculated based on the latest Consumer Price Index for Industrial Workers (CPI-IW). Under the new rates, an employee with a minimum basic salary of ₹18,000 will see an increase of ₹540, taking the total salary to ₹28,440. Pensioners receiving a minimum pension of ₹9,000 will get an additional ₹270, bringing the total to ₹14,220.The government typically revises DA twice a year, in January and July, to address inflation. Earlier in March 2025, the DA/DR was raised by 2 per cent, effective from 1 January. The Confederation of Central Government Employees and Workers (CCGEW) had expressed concern over delays in the announcement and payout this year.
