Dearness allowance: No DA hike decision in Union Cabinet meeting today

There was no decision one the dearness allowance (DA) hike in the Union Cabinet meeting today. Central Government employees are expecting a 3% hike in their existing DA, taking the total to 63%.

The dearness allowance is provided to employees to reduce the impact of inflation on their salaries. It is currently calculated based on the formula approved by the 7th Pay Commission, which takes the last 12 months' AICPI-IW data into account for calculation.

Calculation based on the AICPI-IW data till June 2026 indicate a 3% hike in DA. However, the government has not yet made any announcement yet. The expected DA hike will be effective from July 1, 2026.

Decisions taken by the Cabinet today

The Union Cabinet took three decisions on Tuesday.

First, the Cabinet approved a commitment of Rs.10,000 crore towards establishment of the SME Growth Fund for direct equity investments in Small and Medium Enterprises to create future champions.

"The Fund is envisioned as a transformational instrument to support enterprises at critical inflection points in their growth journey. Majority allocation from SGF will be made towards small and medium manufacturing focused enterprises. Fund will also consider SME’s operating in industrial clusters in Tier II and Tier III cities," Union Cabinet said.

Second, Cabinet approved setting up of Integrated Transport & Logistics Authority. This will help address the "long-standing challenges arising from fragmented planning and implementation across multiple transport-related Ministries and agencies."

Third, the Cabinet passed a resolution congratulating Prime Minister Narendra Modi on 25 years of unbroken leadership.

Meanwhile, employees' unions have been urging the government to announce the DA hike early as a festive relief.

DA is revised twice a year as per the accepted formula.