Diwali bonanza: Centre hikes DA/DR by 3% w.e.f. from July 1, 2025

New Delhi: In a Diwali bonanza to central government employees and pensioners, the Union Cabinet on Wednesday decided to increase Dearness Allowance (DA)/ Dearness Relief (DR) by 3 per cent envisaging an annual outlay of Rs 10,083.96 crore.

The hike in DA and DR comes days after rationalisation of GST rates, bringing down prices of mass consumption items like ghee, paneer, butter, 'namkeen', ketchup, jam, dry fruits, coffee and ice creams, and aspirational goods like TV, AC, washing machines will become cheaper.

The DA/DR increase of 3 per cent over the existing rate of 55 per cent of the basic pay/pension to compensate against the price rise is effective July 1, 2025.

This will benefit about 49.19 lakh central government employees and 68.72 lakh pensioners.

The combined impact on the exchequer on account of an increase in DA and DR will be Rs 10,083.96 crore per annum, I&B Minister Ashwini Vaishnaw said while briefing on decisions taken in the Cabinet meeting.

The increase is in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission.

Centre revises DA/DR twice a year. The last revision, announced in March, was effective from January 1.

Union Cabinet last month had approved a performance-linked bonus for railway employees.