India Cabinet Approves 3-Point Allowance Increase

India’s Union Cabinet approved a three-percentage-point increase in dearness allowance for central government employees and matching dearness relief for pensioners, raising the main rate from 60% to 63% of basic pay or pension. The increase takes effect retrospectively from July 1, 2026. The decision, announced after a Cabinet meeting chaired by Prime Minister Narendra Modi on October 28, applies under the 7th Central Pay Commission scale. Dearness allowance supplements employees’ basic pay, while dearness relief is paid to pensioners. The government said the change follows the accepted formula based on the commission’s recommendations. According to the Cabinet’s figures, 48.54 lakh central government employees and 68.71 lakh pensioners are expected to benefit. The government put the combined annual impact on the exchequer at about ₹10,016 crore. Those beneficiary and cost estimates were presented by the government; they are not independent calculations. The change adds three percentage points to the existing rate, which had been set at 60% effective January 1, 2026. For an employee with basic pay of ₹25,000, the revised rate means monthly dearness allowance of ₹15,750,...