NEW DELHI: Cabinet on Saturday approved a 2% hike in the dearness allowance (DA) and dearness relief (DR) for central govt employees and pensioners. This will benefit around 1.2 crore serving personnel and pensioners. The hike is expected to be effective from Jan 1 and will entail an additional fiscal outgo of Rs 6,791 crore for govt, I&B minister Ashwini Vaishnaw said. Govt said the increase in DA and DR is to compensate against price rise. With this revision, DA will rise to 60% of the basic pay. The DA and DR for central govt employees and pensioners were last revised in October, when it was increased to 58% from 55%, effective from July 1, 2025. “This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission,” an official statement said.