Cabinet hikes Dearness Allowance by 3% with Rs 10,000 crore allocation; check key announcements

The Union Cabinet on Wednesday approved key development schemes worth Rs 29,267, including a Rs 10,016 crore for Dearness Allowance (DA) for Central government employees and pensioners ahead of Diwali festival.

The DA/DR hike will be calculated as due from July 1, 2026 as the relief rate has gone up by 3%, from 60% to 63%.

Also read: Cabinet approves Rs 10,000 crore container manufacturing scheme


The DA hike follows the accepted formula based on the 7th Central Pay Commission's recommendations.

• 6th CPC pay scale: DA/DR rises from 262% to 269% of basic pay (+7%) from 01.07.2026.
• 5th CPC pay scale: DA/DR rises from 483% to 497% of basic pay (+14%) from 01.07.2026.

About 48 lakh Central Government employees and 68 lakh pensioners will benefit from the latest hike in Dearness Allowance.

The other key approvals include Container Manufacturing Promotion Scheme with an allocation of Rs 10,000 crore, Khelo India Sports Goods Manufacturing Scheme with an outlay of Rs 1,856 crore and Pradhan Mantri Viksit Gram Swaraj Yojana with an outlay of Rs 7,395 crore.

The Khelo India Sports Goods Manufacturing Scheme spans over eight years, from FY 2026-27 to FY 2033-34 with two segments: incentives that support manufacturing and interventions that build the wider ecosystem.

The incentives of the scheme include dedicated manufacturing zones, anchor investment support, turnover-linked support and help for existing clusters, while the intervention side covers certification and testing, research and skill development, start-ups and branding and outreach.

Under the Pradhan Mantri Viksit Gram Swaraj Yojana (PMVGSY) scheme, the government aims to transform Panchayats into empowered, self-reliant, accountable and high-performing institutions of local self-government, in line with the vision of Viksit Bharat.

The scheme spans five years from 2026-27 to 2030-31 and applies to all States and Union Territories, including rural local governance institutions in non-Part IX areas.