New Delhi: The Union Cabinet on Wednesday approved a 3% increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners, providing financial relief ahead of the Diwali festival. The decision is part of a broader package of development initiatives with a reported total outlay of ₹29,267 crore.
The DA and DR rates will rise from 60% to 63% of basic pay and pension, respectively, with the increase effective from July 1, 2026. The government has allocated ₹10,016 crore for the DA and DR revision.
The latest hike is expected to benefit approximately 48 lakh Central Government employees and 68 lakh pensioners. The revision follows the accepted formula based on the recommendations of the 7th Central Pay Commission.
DA Hike 2026: New Rates Under Different Pay Commissions
The revised DA and DR rates will apply from July 1, 2026. The changes differ according to the pay commission scales applicable to employees and pensioners.
The revised rates are as follows:
- 7th Central Pay Commission: DA and DR increase from 60% to 63%, representing a hike of 3 percentage points.
- 6th Central Pay Commission: DA and DR increase from 262% to 269% of basic pay, a rise of 7 percentage points.
- 5th Central Pay Commission: DA and DR increase from 483% to 497% of basic pay, a rise of 14 percentage points.
The increase is intended to provide relief against rising living costs. The actual monetary benefit will depend on the applicable pay scale and the employee’s basic pay or pension.
₹10,016 Crore Allocated for DA and DR Hike
The Cabinet has approved an allocation of ₹10,016 crore for the DA and DR increase. The revision covers Central Government employees and pensioners, with the revised rates taking effect retrospectively from July 1, 2026.
Dearness Allowance is paid to serving employees, while Dearness Relief is provided to pensioners. Both are revised periodically to help offset the impact of inflation on household expenses.
Cabinet Approves Development Schemes Worth ₹29,267 Crore
Alongside the DA and DR revision, the Union Cabinet approved several development schemes covering container manufacturing, sports goods manufacturing and rural governance.
The major approvals include:
- Dearness Allowance and Dearness Relief: ₹10,016 crore.
- Container Manufacturing Promotion Scheme: ₹10,000 crore.
- Khelo India Sports Goods Manufacturing Scheme: ₹1,856 crore.
- Pradhan Mantri Viksit Gram Swaraj Yojana (PMVGSY): ₹7,395 crore.
These initiatives focus on employee and pensioner welfare, strengthening domestic manufacturing, developing the sports goods industry and improving local self-governance in rural areas.
Khelo India Sports Goods Manufacturing Scheme: ₹1,856 Crore Outlay
The Union Cabinet approved the Khelo India Sports Goods Manufacturing Scheme with an outlay of ₹1,856 crore. The scheme will run for eight years, from FY 2026-27 to FY 2033-34.
It is designed to strengthen India’s sports goods manufacturing industry through two broad components: manufacturing incentives and measures to develop the wider industry ecosystem.
Key Features of the Scheme
The manufacturing incentive component includes:
- Development of dedicated manufacturing zones.
- Support for anchor investments.
- Turnover-linked incentives.
- Assistance for existing manufacturing clusters.
The ecosystem development component covers:
- Certification and testing facilities.
- Research and development.
- Skill development.
- Support for start-ups.
- Branding and outreach initiatives.
Through these measures, the scheme aims to improve domestic manufacturing capabilities and support the development of a stronger sports goods industry.
Pradhan Mantri Viksit Gram Swaraj Yojana: ₹7,395 Crore
The Cabinet also approved the Pradhan Mantri Viksit Gram Swaraj Yojana (PMVGSY), with an outlay of ₹7,395 crore. The scheme will be implemented over five years, from FY 2026-27 to FY 2030-31.
The initiative aims to transform Panchayats into empowered, self-reliant, accountable and high-performing institutions of local self-government, in line with the government’s vision of Viksit Bharat.
Coverage and Objectives
The scheme will apply to all States and Union Territories, including rural local governance institutions in areas not covered under Part IX of the Constitution.
Its broader objectives include strengthening Panchayat-level institutions, improving accountability and enhancing the capacity of local bodies to deliver effective governance in rural areas.
Container Manufacturing Promotion Scheme Gets ₹10,000 Crore
The Union Cabinet has also approved the Container Manufacturing Promotion Scheme with an allocation of ₹10,000 crore.
The scheme is among the key industrial initiatives included in the Cabinet’s latest package of approvals. It is aimed at supporting the development of India’s container manufacturing capabilities and strengthening domestic manufacturing.
The Union Cabinet’s latest decisions combine financial relief for Central Government employees and pensioners with investments in manufacturing, sports goods production and rural governance. The 3% DA and DR hike, effective from July 1, 2026, is expected to benefit around 48 lakh employees and 68 lakh pensioners, while the other approved schemes focus on strengthening domestic industries and local institutions.
