Union Cabinet approves 2% increase in Dearness Allowance
GS3Economy · S&T · Environment · Security· Growth, inflation & macro indicators· Prelims·
Why in news
The Union Cabinet approved a 2% increase in Dearness Allowance (DA) and Dearness Relief (DR) for Central Government employees and pensioners to mitigate the impact of rising prices.
Background
The move impacts 50.46 lakh employees and 68.27 lakh pensioners at an estimated cost of ₹6,791.24 crores.
Facts for Prelims
- FactDA/DR increase: 2% over the existing rate of 58% of basic pay/pension
- FactTotal beneficiaries: 50.46 lakh government employees and 68.27 lakh pensioners
- FactEffective date of the increase: January 1, 2026
- FactTotal fiscal cost of the DA increase: ₹6,791.24 crores
For Mains
Q. Discuss the significance of Dearness Allowance in maintaining the purchasing power of government employees and the fiscal implications of periodic DA revisions on the national budget.
Dimensions to cover in your answer
- Fiscal pressure: Balancing the rising expenditure on DA/DR with the need for fiscal consolidation
- Inflation indexing: The mechanism of using DA as a tool to offset Consumer Price Index (CPI) fluctuations
Keywords: Dearness Allowance · Purchasing Power · Fiscal Expenditure · Inflation Indexing · Public Finance
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