Centre announces 3% DA hike: Level-1 employee to get Rs 10,440, pensioners to get Rs 5,250; check details 

Bringing festive cheer ahead of Diwali, the central government on Wednesday announced a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR) for employees and pensioners. With this revision, the DA rate has increased from 55% to 58%, benefiting nearly 1.2 crore central government employees and pensioners. For Level-1 employees, who draw a minimum basic salary of Rs 18,000 per month, the 3% hike will translate into an increase of Rs 540 every month. This means that such employees will now receive Rs 10,440 per month as DA (58% of Rs 18,000). Pensioners at the minimum basic pension of Rs 9,000 will see a rise of Rs 270 per month, taking their DR amount to Rs 5,220.

Arrears from July 2025

The hike has been implemented with retrospective effect from July 1, 2025. Consequently, employees and pensioners will receive arrears for the July–September period along with their October salary or pension. For Level-1 employees, this will mean arrears of Rs 1,620 in addition to the revised monthly increase.

DA and DR are revised twice a year—January and July—based on movements in the All India Consumer Price Index for Industrial Workers (CPI-IW). While the implementation often comes with a delay, arrears are paid to make up for it. Notably, this hike is the final one under the 7th Pay Commission, which will cease on December 31, 2025. The 8th Pay Commission is set to take over from January 2026.

Bonus announcement

In addition to the DA/DR hike, the Finance Ministry has approved an ad-hoc bonus for central government Group C and non-gazetted Group B employees. Eligible staff will receive the equivalent of 30 days’ emoluments, fixed at Rs 6,908 for the year 2024-25.

Eligibility criteria specify that employees must be in service as of March 31, 2025, and should have worked continuously for at least six months during the fiscal year. Those who have worked for a shorter duration will receive the bonus on a pro-rata basis. The announcement of both DA/DR and bonus before Diwali is being seen as a move to boost festive sentiment, as higher disposable income typically fuels spending.

Total benefit for employees

For a Level-1 employee, the October payout will be significant. They will receive arrears of Rs 1,620, a bonus of Rs 6,908, and a permanent monthly increase of Rs 540, adding up to an immediate benefit of Rs 8,528. Higher-level employees will see proportionately larger increases based on their pay scales.

Bonus for Railway employees

In September, the Union Cabinet approved a Productivity Linked Bonus (PLB) of Rs 1,866 crore for Railway employees, benefiting 10.90 lakh staff members. Union Minister Ashwini Vaishnaw stated that the bonus, equivalent to 78 days’ wages, will be given to 10,91,146 employees. This annual PLB, released before Durga Puja/Dussehra, rewards workers for performance. Last year, the government sanctioned Rs 2,029 crore for 11.72 lakh employees. The maximum payout per employee is Rs 17,951. Beneficiaries include track maintainers, locomotive pilots, guards, station masters, technicians, supervisors, and other Group ‘C’ staff. The Railways achieved record freight loading of 1,614.90 million tonnes and carried 7.3 billion passengers in 2024–25.

Looking ahead to 8th Pay Commission

While the latest revision brings short-term relief, employees are now awaiting the rollout of the 8th Pay Commission. Though it was announced in January 2025, its terms of reference and members are yet to be finalised. Experts believe its recommendations may take at least two years to be implemented, but arrears will be payable from January 1, 2026.

With this DA/DR revision and bonus, the government has attempted to ease inflationary pressures and lift employee morale, while pensioners also gain additional support. The twin measures are expected to provide a modest push to consumption demand in the economy during the festive season, making this announcement especially timely.