SF Prep Notes

Cabinet approves 3% DA hike for Central Government employees and pensioners

The Union Cabinet on 1 October 2025 approved a 3% increase in Dearness Allowance and Dearness Relief, from 55% to 58% of basic pay or pension, with effect from 1 July 2025.

Summary

The Union Cabinet, chaired by Prime Minister Narendra Modi, on 1 October 2025 approved an additional instalment of Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners with effect from 1 July 2025. The increase of 3% takes the rate from 55% to 58% of basic pay or pension, to compensate for price rise. The combined cost to the exchequer will be ₹10,083.96 crore a year. About 49.19 lakh employees and 68.72 lakh pensioners will benefit. The increase follows the accepted formula based on the recommendations of the 7th Central Pay Commission.

Key facts

Increase
3% – from 55% to 58% of basic pay/pension
Effective
1 Jul 2025
Annual cost
₹10,083.96 crore
Beneficiaries
49.19 lakh employees + 68.72 lakh pensioners
Formula
7th Central Pay Commission

Practice MCQs 3 questions

Q1

After the hike approved on 1 October 2025, what is the Dearness Allowance rate for Central Government employees?

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Correct answer: C — 58%

The 3% increase takes DA from 55% to 58% of basic pay.

Q2 Advanced

From which date is the DA/DR increase approved by the Cabinet on 1 October 2025 effective?

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Correct answer: B — 1 July 2025

The additional instalment of DA and DR is effective from 1 July 2025.

Q3 Advanced

Consider the following statements about the DA hike approved in October 2025: 1. It will benefit about 68.72 lakh Central Government employees. 2. The increase follows a formula based on the recommendations of the 8th Central Pay Commission. Which of the above is/are correct?

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Correct answer: D — Neither 1 nor 2

Both are wrong: 68.72 lakh is the number of pensioners (employees are 49.19 lakh), and the formula is based on the 7th Central Pay Commission.

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