The discussion on dearness allowance (DA) for central government employees and retirees has resumed. In April of this year, the central government announced an increase in dearness allowance from 58% to 60%. This increase became effective January 1, 2026, and will benefit over 5 million central government employees and approximately 6.5 million retirees. Dearness Relief (DR) was also increased.

Additionally, the Indian Banks' Association announced an increase in DA and DR for  bank employees for May, June, and July 2026. The Indian Railways has also decided to increase dearness allowance by 2% for its employees and retirees. Therefore, everyone is now awaiting the second DA increase this year from the central government.

The decision to increase dearness allowance is primarily based on the All India Consumer Price Index for Industrial Workers (AICPI-IW). This index was recorded at 149.1 in March 2026, 149.9 in April, and 150.8 in May. Based on these figures, a 3 to 4 percent increase in DA is expected this time. However, the final decision will be made only after the June 2026 AICPI-IW data and central government approval.

Based on the past few years, the central government has continued the tradition of increasing dearness allowance (DA) before Diwali. DA increases were also announced before Diwali in 2024 and 2025. Therefore, it is expected that this year too, employees may receive a DA hike before Diwali, in October or November.

An increase in dearness allowance not only increases monthly salaries but also positively impacts provident fund (PF), retirement pay, gratuity, and other allowances. Therefore, DA increases are considered a very important issue for central government employees and pensioners.

PC: Money9live