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Centre’s 3% DA Increase Is Being Matched by Several States as Unions Push Back

State orders to backdate payments and clear arrears are forcing fresh budget hits and could widen labour unrest in key states.

Overview

  • The Union Cabinet approved an additional 3 percentage-point Dearness Allowance and Dearness Relief instalment effective July 1, 2026, in a decision taken on October 28.
  • Several state governments have formally matched the Centre’s move, with Gujarat saying on Wednesday it will pay July–October arrears with November salaries and Uttarakhand ordering cash arrears for the same period.
  • Punjab announced a 3% instalment that raises its DA to 53% and said the increase will show in December pay, but unions there rejected the hike and announced a month-long agitation starting November 13.
  • Gujarat has quantified the cost as about Rs 523 crore in arrears and an added annual burden of Rs 1,569 crore, illustrating how backdated DA payments create immediate fiscal pressure for states.
  • Dearness Allowance and Dearness Relief are inflation-linked top-ups for serving employees and pensioners, and unresolved demands in several states — including calls for full arrears and restoration of the Old Pension Scheme — mean partial hikes may not end protests or policy pressure.