DA hike for govt employees: Cabinet okays 3% Dearness Allowance rate increase ahead of Diwali

DA Hike July 2025: The Union Cabinet chaired by PM Modi on Wednesday approved proposal to increase the Dearness Allowance (DA) by 3% to 58% for central government employees and pensioners, a significant move ahead of Diwali.

The move is set to benefit 49 lakh central government employees and 69 pensioners. The new DA rate will be effective from July 1, Union Minister Ashwini Vaishnaw said, adding that the financial implication of the same stands at 10,084 crore.

This also comes after the Union Cabinet last month approved a performance-linked bonus for railway employees.


Earlier in March 2025, the government had raised the DA/DR by 2 percent, effective from January 1. This revision increased the rate to 55 percent, providing employees and pensioners with additional funds to cope with inflation and everyday expenses.

To fight against rising inflation, the central government increases the Dearness Allowance periodically. It is usually revised twice every year-- in January and July. However, this time there has been a delay the Confederation of Central Government Employees and Workers (CCGEW) has expressed concern over the same, noting that the usual timeline of announcement in late September and arrears payout in early October has been disrupted.

DA hike effective date, arrears & implementation

The DA for the central government employees is calculated based on the latest Consumer Price Index for Industrial Workers (CPI-IW). The Labour Bureau, a wing of the Labour Ministry, publishes the CPI-IW data every month. There is a set formula to calculate the Dearness Allowance of central government employees and pensioners.

Effective July 1, a 3% increase would add about Rs 540 to the monthly income of an employee with minimum basic salary of Rs 18,000 under the 7th Pay Commission.

That means, their total salary would jump to Rs 28,440. Pensioners with a minimum pension of Rs 9,000 would receive an additional Rs 270, bringing their total pension to Rs 14,220 at the revised 58 per cent rate.