New Delhi, April 18 -- The Cabinet on Saturday approved a 2% increase in Dearness Allowance (DA) for central government employees and pensioners, offering a modest boost to compensation amid growing demands of broader pay revisions.

The latest hike will take the total DA from 58% to 60% of basic pay. It will be effective from January 1, 2026 and will also apply to pensioners, who will receive a corresponding increase in Dearness Relief (DR).

The combined impact on the exchequer on account of increase in both Dearness Allowance and Dearness Relief would be Rs.6791.24 crore per annum. The move is set to benefit 50.5 lakh employees and 68.3 lakh pensioners of the Central government, according to an official notice.

The DA was last revised...