Centre Approves 3% DA Hike for Government Employees Ahead of Diwali

October 29, 2026

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a 3 percentage point increase in dearness allowance (DA) for around 4.85 million central government employees. The dearness relief (DR) for 6.87 million pensioners has also been increased by the same amount ahead of Diwali.

Information and Broadcasting Minister Ashwini Vaishnaw announced the decision on Wednesday, describing it as a “Diwali gift” for government employees and pensioners. The revised allowance will be effective from July 1, 2026.

The increase will raise DA and DR from 60% to 63%. According to Vaishnaw, the combined annual financial impact of the decision on the government exchequer will be ₹10,016.10 crore.

Previous DA Hike Announced in April

The Centre generally revises dearness allowance and dearness relief twice a year, usually with retrospective effect from January and July.

The previous increase was announced on April 18, 2026. At that time, DA and DR were raised by two percentage points, from 58% to 60%, with effect from January 1, 2026. That decision had an annual financial impact of ₹6,791.24 crore.

Dearness allowance is calculated as a percentage of an employee’s basic salary. It is intended to help government employees cope with inflation and the rising cost of living. Dearness relief serves a similar purpose for pensioners.

The current DA calculation follows the accepted formula based on the recommendations of the 7th Central Pay Commission. The allowance is linked to the Consumer Price Index for Industrial Workers (CPI-IW).

Central Pay Commissions are constituted periodically to review the salary structure, retirement benefits and other service conditions of central government employees and recommend changes.

Centre Approves ₹10,000-Crore Container Manufacturing Scheme

The Union Cabinet has also approved a ₹10,000-crore scheme to promote container manufacturing in India and reduce dependence on imports.

The scheme will provide financial and infrastructure support to manufacturers through four key measures: interest assistance on loans, shared testing and certification facilities, land at concessional rates and support for operating costs.

Of the total outlay, ₹859 crore has been allocated to provide a 3% annual interest subsidy on term loans. Another ₹150 crore will be used to develop shared testing facilities, including a crash-impact testing centre.

Under the eligibility conditions, a new manufacturing facility must have the capacity to produce at least 1,00,000 twenty-foot equivalent units (TEUs) of containers annually. Existing manufacturing units seeking to expand must add at least 25,000 TEUs of annual production capacity.

The scheme aims to strengthen domestic manufacturing capacity and help India meet more of its container requirements through local production.