Cabinet Approves 2% DA Hike from Jan 2026 for Central Government Employees and Pensioners
New Delhi | April 18, 2026 — In a move providing modest financial relief to millions, the Union Cabinet has officially approved a 2% increase in Dearness Allowance (DA) and Dearness Relief (DR). This decision, announced today, is aimed at compensating for the impact of inflation and will benefit over 11 million central government employees and pensioners.
The hike brings the total DA from 58% to 60% of basic pay, effective retrospectively from January 1, 2026.
Key Highlights of the Announcement
The adjustment follows the standard formula based on the All India Consumer Price Index for Industrial Workers (AICPI-IW). While the hike is a routine semi-annual revision, it comes at a critical juncture as the nation transitions toward a new pay structure.
- Total DA/DR: Increased from 58% to 60%.
- Effective Date: January 1, 2026 (Arrears for Jan–March will be paid).
- Beneficiaries: Approximately 4.8 million employees and 6.8 million pensioners.
- Fiscal Impact: The move is expected to cost the exchequer several thousand crores annually.
The announcement follows a period of heightened anticipation and recent protests by employee unions over the delay in the DA notification, which is usually cleared before the Holi festival.
The backdrop of this hike is dominated by the 8th Pay Commission, which was formally constituted in late 2025. As the commission begins its consultation phase, employee bodies—led by the National Council–Joint Consultative Machinery (NC-JCM)—have already submitted memorandums demanding a significant overhaul of the current pay matrix.
Major Demands under the 8th Pay Commission:
- Fitment Factor: Unions are pushing for a fitment factor of 3.83, which would theoretically raise the minimum basic pay from the current ₹18,000 to roughly ₹69,000.
- Annual Increments: A proposal to increase annual increments to 6%.
- HRA Revision: Higher House Rent Allowance slabs, reaching up to 40% for metro cities.
- Pension Reform: Ongoing discussions regarding the restoration of the Old Pension Scheme (OPS) or a modified 50% guaranteed pension under the Unified Pension Scheme (UPS).
What it Means for Employees
While the 2% hike is seen as “modest” by many union leaders, it provides immediate liquidity while the broader 8th Pay Commission recommendations are finalized. For an employee with a basic pay of ₹30,000, this 2% hike results in a monthly increase of ₹600.
| Basic Pay Level | DA at 58% | DA at 60% | Monthly Increase |
| ₹18,000 (Min) | ₹10,440 | ₹10,800 | ₹360 |
| ₹50,000 | ₹29,000 | ₹30,000 | ₹1,000 |
| ₹1,00,000 | ₹58,000 | ₹60,000 | ₹2,000 |
Note: The government has clarified that there is currently no proposal to merge DA with basic pay, even though the total has reached the 60% threshold. Revisions will continue under the existing system until the 8th Pay Commission’s recommendations are officially implemented, likely between late 2026 and 2027.
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