India’s central government employees and pensioners are awaiting a decision on their July 2026 inflation-linked allowances, with no new rate approved since the Cabinet’s April increase affecting millions of recipients.
Dearness allowance supplements employees’ basic pay, while dearness relief applies to basic pension. Both rates stand at 60%. The Cabinet raised them from 58% by 2 percentage points, effective Jan. 1, and announced the increase on April 18.
The government puts the January increase’s yearly cost at ₹6,791.24 crore. It estimates the change covers about 5.046 million employees and 6.827 million pensioners. Those figures apply to the approved January increase, not the pending July revision.
On Oct. 14, the Cabinet approved a separate productivity-linked bonus for railway employees but did not announce a dearness allowance or dearness relief revision. The bonus covers 1,140,770 employees at a stated cost of ₹2,009.61 crore.
The Cabinet links allowance increases to a formula adopted from the Seventh Central Pay Commission’s recommendations. India’s Labour Bureau reported that the Consumer Price Index for Industrial Workers reached 151.9 in June, up 1.1 points from May. The index uses 2016 as its base year, set at 100.
The Economic Times has projected a rise to 63% using index readings from July 2025 through June 2026. That would add 3 percentage points to the current rate. The Cabinet has not approved that projection.
In 2025, the Cabinet acted on Oct. 1 to raise the July rate to 58% from 55%, with the change effective July 1. That earlier timetable does not establish a date for this year’s decision.
The Economic Times reported that All India Defence Employees’ Federation Secretary C. Srikumar expects the allowance decision at a Cabinet meeting it identified as set for Oct. 21. The government has not confirmed a date for the allowance decision.
