The Union Cabinet has approved what Information and Broadcasting Minister Ashwini Vaishnaw described as a Diwali gift for central staff and retirees: a three-percentage-point rise in Dearness Allowance (DA) and Dearness Relief (DR), taking both rates from 60% to 63% of basic pay or basic pension. The decision was announced on October 28, 2026, and takes effect retrospectively from July 1.

According to the official Cabinet announcement, the revision covers 48.54 lakh central government employees and 68.71 lakh pensioners—a total of about 1.17 crore people. The government estimates an additional annual expenditure of ₹10,016.10 crore. The rate is approved, but the date when every beneficiary will receive the higher amount and arrears has not been confirmed in the Cabinet's announcement.

Diwali Gift: Who Benefits From the 63% Rate?

The Diwali gift label reflects the timing of the decision ahead of the festival on Sunday, November 8, 2026. It does not mean the Centre has announced a separate festival bonus. The latest allowance revision is part of the regular inflation-linked system. Serving employees receive DA calculated on their eligible basic pay. Retired beneficiaries covered by the decision receive dearness relief calculated on basic pension. Neither percentage is applied to an employee's entire take-home salary. The official statement says the increase follows the formula accepted under the Seventh Central Pay Commission to compensate for changes in the cost of living.

Dearness Allowance Hike 2026: What Changed?

The dearness allowance hike 2026 raises the applicable rate by three percentage points, from 60% to 63%. This is not a 63% increase in salary, nor does it add 3% to every component of gross pay. The DA increase applies retrospectively from July 1, 2026, even though the Cabinet approved it nearly four months later. That means eligible people should receive the difference for any months during which they were paid at the earlier rate. DA and DR are ordinarily adjusted twice a year, with effective dates of January 1 and July 1. The revisions use the All-India Consumer Price Index for Industrial Workers, rather than being discretionary festival payouts.

How Much Will Salary and Pension Payments Rise?

A quick calculation shows what the change means for central government employees at different basic-pay levels:

Illustrative figures assume an unchanged basic amount and that July, August, September and October were all paid at 60%. Actual arrears depend on when the revised rate is implemented and individual pay changes. These calculations exclude tax, deductions and possible effects on related allowances.

For example, someone with a basic pension of ₹25,000 would receive ₹750 more each month as dearness relief. The same arithmetic applies to the eligible basic pension of other pensioners.

Will DA Arrears Arrive Before Diwali?

Although officials described the measure as a Diwali gift, the official release does not promise that arrears will be credited before November 8. Some reports expect payment with October salary or pension; others, including The Economic Times, say the higher amount and July-to-October arrears may arrive with November pay. The DA increase is therefore confirmed, but the exact bank-credit date remains dependent on implementation instructions and individual payroll or pension-processing schedules. Employees should check their departmental pay instructions and salary slips. Retirees should consult their paying bank or pension-disbursing authority once the relevant instructions are issued.

What Happens After This Revision?

The Cabinet's ₹10,016.10-crore estimate is an annual fiscal impact, not a one-time payout attached to the festival. It covers the higher payments to serving staff and pensioners over a year. The next regular DA/DR review would ordinarily take effect from January 1, 2027, although the rate and announcement date will depend on future inflation figures and government approval. For now, the key numbers are settled: a three-percentage-point rise, a 63% rate, an effective date of July 1 and about 1.17 crore beneficiaries. The outstanding question is when the revised amounts and arrears will appear in individual accounts.