India’s Cabinet approved a three-percentage-point increase in Dearness Allowance for central government employees and matching Dearness Relief for pensioners, raising the main rate to 63% from July 1, 2026, at an annual cost of ₹10,016 crore.
Under the 7th Central Pay Commission scale, both rates will rise from 60% of basic pay or pension. Dearness Allowance supplements employees’ basic pay, while Dearness Relief applies to basic pension. For people on Sixth Commission scales, the rate will move from 262% to 269%; on Fifth Commission scales, it will rise from 483% to 497%.
Figures presented at the Cabinet briefing put the annual cost at ₹10,016 crore (₹100.16 billion), with about 4.8 million central government employees and 6.8 million pensioners expected to benefit. A Department of Expenditure memorandum dated April 22 set the previous 7th Commission rate at 60%, effective Jan. 1, 2026. Business Standard reported that the increase follows the accepted formula based on the Commission’s recommendations.
The allowance figure is an annual cost; the sports and rural-governance scheme figures are multiyear allocations. The decision follows an earlier EconoTimes report on employees and pensioners awaiting the July allowance decision.
Alongside the allowance decision, ministers approved three measures: ₹10,000 crore for container manufacturing, ₹1,856 crore for sports-goods manufacturing and ₹7,395 crore for rural governance. The sports-goods scheme is funded for eight years, from fiscal 2026-27 through 2033-34. The rural-governance program, classified as a Centrally Sponsored Scheme, has a five-year outlay through fiscal 2030-31. News on AIR reported that it applies across Indian states and Union Territories and includes rural local governance institutions.
Railways Minister Ashwini Vaishnaw said two of the four Cabinet decisions would strengthen manufacturing. In a video of the Oct. 28 briefing posted by ANI, he said the decisions were “set to significantly strengthen our country's manufacturing sector.”
