The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the release of an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners.This will come into effect from July 1, 2026, representing an increase of 3 per cent over the existing rate of 60 per cent of basic pay/pension, to compensate for price rise.The combined impact on the exchequer on account of the increase in both Dearness Allowance and Dearness Relief would be Rs 10,016.10 crore per annum. This will benefit about 48.54 lakh Central Government employees and 68.71 lakh pensioners.This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.The government revises DA and DR biannually, in January and July, to help employees and retirees mitigate the effects of inflation.Dearness Allowance is paid to government employees based on a percentage of their basic salary to offset increasing living expenses, while Dearness Relief serves the same purpose for retirees.