India Announces Diwali Bonuses and Central Allowance Hikes
The Indian central government and Tamil Nadu state government announced financial bonuses and allowance increases for millions of employees and pensioners ahead of Diwali.
The Union Cabinet of India approved a 3 percentage point increase in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners on October 28, 2026. Effective retroactively from July 1, 2026, the hike raises the rates from 60% to 63% of basic pay. This adjustment, based on 7th Central Pay Commission recommendations, aims to offset inflation and follows a previous 2 percentage point increase approved in April 2026.
Union Minister Ashwini Vaishnaw described the decision as a "Diwali gift from Prime Minister Narendra Modi." The revision will benefit approximately 1.17 crore people, including 48.54 lakh employees and 68.71 lakh pensioners, with an estimated annual cost to the national exchequer of ₹10,016.10 crore. Additionally, the Department of Public Enterprises revised Industrial Dearness Allowance rates for Central Public Sector Enterprises executives and supervisors effective October 1, 2026.
Simultaneously, the Government of Tamil Nadu announced Diwali bonuses and ex-gratia payments for state public sector workers. Chief Minister C Joseph Vijay allocated ₹367.20 crore to provide payments of up to 20% for eligible Group C and Group D employees for the 2025-26 financial year. These payments will benefit 260,497 workers, with the specific percentage determined by the profitability of each undertaking.
