In a festive boost for Central Government employees and pensioners, the Union Cabinet on Wednesday approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR), effective from July 1, 2025. This increase, raising the DA/DR rate from 55% to 58% of basic pay or pension, aims to offset rising prices and will benefit approximately 49.19 lakh employees and 68.72 lakh pensioners. The decision, announced by Information and Broadcasting Minister Ashwini Vaishnaw, entails an annual expenditure of Rs 10,083.96 crore for the exchequer.

The DA/DR hike follows the government’s recent rationalisation of GST rates, which reduced prices on everyday items like ghee, paneer, butter, namkeen, ketchup, jam, dry fruits, coffee, and ice cream, as well as aspirational goods such as TVs, air conditioners, and washing machines. This dual relief package is being positioned as a Diwali bonanza, aimed at easing financial burdens and boosting festive spending among millions of households. The increase aligns with the formula recommended by the 7th Central Pay Commission, which ties DA/DR adjustments to inflation metrics.

The government revises DA/DR twice annually, with the previous adjustment of 4% announced in March 2025, effective from January 1. The latest hike reflects the Centre’s ongoing efforts to support its workforce and retirees amid economic pressures. Last month, the Union Cabinet also approved a performance-linked bonus for railway employees, further underscoring its focus on employee welfare ahead of the festive season.

Also Read: FM to Launch Nationwide Campaign for Awareness on Unclaimed Assets

This decision is expected to provide significant financial relief, enhancing purchasing power for central government employees and pensioners during Diwali. The move has been welcomed as a timely gesture, reinforcing the government’s commitment to supporting its workforce and retirees in a period of rising costs.

Also Read: India-EFTA Trade Deal Timely Booster Amid Global Disruptions: Swiss Official