India raises Dearness Allowance to 60% for central employees

The Indian government announced a dearness allowance (DA) increase from 58% to 60% of basic salary, effective 1 January 2026. The hike applies to roughly 5 million central government employees and 6.5 million pensioners, including defence and railway staff, and is intended to offset rising inflation measured by the All‑India Consumer Price Index (AICPI).

A further DA revision is expected in July 2026, with speculation of a 3‑4% rise based on recent AICPI‑IW data. If the July announcement does not occur, the government may announce an adjustment in October or November, traditionally before Diwali. The DA formula is recalculated bi‑annually for employees and quarterly for public‑sector workers, using the AICPI averages and the 7th Pay Commission guidelines.

The increase also influences other components of compensation such as pensions, gratuity, provident‑fund contributions and other allowances, affecting the overall pay structure for the millions of central personnel.