Keralam Hikes State Dearness Allowance to 37% for Employees

Allowance Rates Increased

Keralam's Finance Department increased Dearness Allowance (DA) for state government employees and Dearness Relief (DR) for pensioners by two percentage points. Effective from October 17, the revised rates moved from 35% to 37%. This adjustment applies to eligible state staff, including teachers, local government personnel, and various categories of pensioners.

Payments reflecting the new rates will be disbursed with October 2026 salaries in November, while pensioners will receive their enhanced relief with their November 2026 pension.

Broad Coverage and Arrears

The policy covers a broad spectrum of beneficiaries, extending to staff in aided schools, private colleges, and polytechnics. Employees and pensioners within public sector establishments, statutory corporations, autonomous bodies, and grant-in-aid institutions that follow Keralam's DA/DR structure are also included, subject to specific conditions. The state government will issue separate orders to clarify the payment of arrears, which are due from January 1, 2026.

Previous Adjustments

This latest revision follows an earlier increase in DA and DR from 25% to 35% in February 2026. Separately, Keralam also adjusted DA for eligible teaching staff under University Grants Commission (UGC), All India Council for Technical Education (AICTE), and Medical Education schemes.

For those drawing revised pay scales, the rate rose from 58% to 60%, while staff continuing in the sixth revised pay scale saw an increase from 257% to 262%. Corresponding DR revisions apply to eligible UGC pensioners.

Economic Impact for Keralam Businesses

The two-percentage-point increase in DA and DR will provide additional income to a significant portion of Keralam's population, particularly government employees and pensioners. This rise in disposable income could support consumer spending across the state, benefiting retail and services sectors.

Businesses operating in Keralam may observe a marginal uplift in demand for goods and services as these revised payments begin in November 2026. Monitoring official notifications for arrears will also inform future spending patterns.