Daijiworld Media Network - New Delhi

New Delhi, Apr 18: The Union Cabinet of India, chaired by Narendra Modi, has approved a 2 per cent increase in Dearness Allowance (DA) for central government employees and pensioners, effective from January 1, 2026.

The decision will also raise Dearness Relief (DR) for pensioners, increasing the existing rate from 58 per cent of basic pay or pension. The revision is intended to offset inflation and rising living costs, in line with the formula recommended by the 7th Central Pay Commission.

According to official estimates, the move will cost the exchequer approximately Rs 6,791 crore annually and will benefit around 50.46 lakh central government employees and 68.27 lakh pensioners across the country.

The announcement comes amid ongoing discussions on broader salary restructuring under the proposed 8th Central Pay Commission, which is expected to significantly overhaul government pay scales.

In parallel, the National Council–Joint Consultative Machinery has submitted a memorandum proposing a major revision in the pay structure, including a higher fitment factor of 3.83. If accepted, this could raise the minimum basic pay from Rs 18,000 to nearly Rs 69,000.

The proposal also includes suggestions such as a 6 per cent annual increment, additional increments upon promotion, and enhanced gratuity benefits. The fitment factor plays a key role in determining revised salaries by adjusting basic pay according to inflation and cost-of-living changes.

If implemented, the proposed changes under the 8th Pay Commission would impact over 50 lakh employees and nearly 65 lakh pensioners, making it one of the most significant potential pay revisions in recent years.