The Union Cabinet chaired by Prime Minister Narendra Modi has approved a 3% increase in Dearness Allowance for central government employees and Dearness Relief for pensioners, effective from July 1, 2026. This raises the DA/DR rate from the existing 60% to 63% of basic pay/pension, intended to compensate beneficiaries against price rise. The combined annual impact on the exchequer is estimated at ₹10,016.10 crore, which will benefit approximately 48.54 lakh central government employees and 68.71 lakh pensioners. The increase follows the accepted formula based on recommendations of the 7th Central Pay Commission.