Good news for central govt employees: 2% DA hike for January 2026 cleared; how much will salary increase?

In a significant relief for lakhs of households, the Union Cabinet on April 18, 2026 approved a 2 per cent increase in Dearness Allowance (DA), raising it from 58 per cent to 60 per cent of basic pay. The hike, effective from January 1, 2026, will benefit over one crore central government employees and pensioners, who will also receive Dearness Relief (DR) at the same revised rate. The decision, which had been pending for weeks, comes as a response to inflation trends and ensures that salaries and pensions retain their real value. Importantly, employees will also receive arrears for the past three months - January, February and March - adding to the immediate financial boost.

DA increased to 60%

With the latest revision, the total Dearness Allowance now stands at 60 per cent of basic pay, up from 58 per cent earlier. This is a routine but crucial adjustment made twice a year to offset rising prices. The increase may seem modest, but it directly impacts take-home salary and pension. The revision applies uniformly across all pay levels under the 7th Pay Commission, ensuring that employees from Level 1 to Level 18 see a rise in earnings.

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How much salary will increase?

The actual increase depends on an employee’s basic pay, as DA is calculated as a percentage of it.

Here is a simple breakdown:

• Basic pay: Rs 30,000
  • Old DA (58%): Rs 17,400
  • New DA (60%): Rs 18,000
  • Monthly increase: Rs 600

• Old DA: Rs 21,170
• New DA: Rs 21,900
• Monthly increase: Rs 730

For employees with higher salaries, the increase will be proportionately larger. Even though the percentage hike is small, it ensures steady income growth.

Arrears from January 2026: Extra payout explained

Since the revised DA is effective from January 1, 2026, employees will not only get higher salaries going forward but also arrears for three months.

This means:

• January 2026 dues
• February 2026 dues
• March 2026 dues

These arrears will be paid in one go, giving employees a lump sum benefit along with their revised salary.

Over 1 crore people to benefit

The decision impacts a large section of the population:

• Around 50 lakh central government employees
• More than 65 lakh pensioners

Pensioners will receive the same 2 per cent increase under Dearness Relief, ensuring parity and support for those on fixed incomes.

Why DA is revised every year?

Dearness Allowance is a cost-of-living adjustment linked to inflation. It is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW), which tracks changes in the prices of essential goods.

The government revises DA twice every year - January and July to ensure that employees’ purchasing power is protected despite rising costs.

Focus shifts to 8th Pay Commission

While the 2 per cent hike offers relief, it also highlights a broader issue - demand for structural salary reforms.

Employee unions have been pushing for changes under the proposed 8th Pay Commission. Discussions around a higher fitment factor and a significant jump in minimum basic pay are gaining traction.

In that context, the current DA hike is seen as an interim measure, not a long-term solution. The last DA revision was announced in October 2025, when it was increased from 55 per cent to 58 per cent. With the latest hike to 60 per cent, the pace of increase reflects relatively moderate inflation levels.