The Assam Cabinet on June 5, 2026, approved a two percentage point increase in Dearness Allowance (DA) for state government employees and pensioners, raising the rate from 58 percent to 60 percent of basic pay. The cabinet also sanctioned a substantial ₹500 crore outlay over the next five years for the development of Dibrugarh as Assam’s second capital.

These key decisions, made at the first cabinet meeting following its expansion, are set to benefit over eight lakh state government employees and pensioners, while simultaneously initiating a significant infrastructure push in Upper Assam. The move also includes enhanced career advancement opportunities for Grade-IV school employees and an increase in the MLA Local Area Development Fund.

What was announced

Chief Minister Himanta Biswa Sarma announced the cabinet’s resolutions after the meeting held on June 5, 2026. The cabinet approved a two percentage point hike in Dearness Allowance (DA) and Dearness Relief (DR) for state government employees and pensioners, increasing the rate from the existing 58 percent to 60 percent. This revised rate is effective from January 1, 2026.

In a significant step towards regional development and administrative decentralisation, the cabinet declared Dibrugarh as the Second State Capital Region. An allocation of ₹500 crore has been approved for its development over the next five years. To oversee this ambitious project, a Dibrugarh Second Capital Complex Development Authority will be constituted, with the local MLA of Dibrugarh serving as its chairman with cabinet rank, Chief Minister Sarma said. The proposed region will encompass an area within a 20-kilometre radius of the Dibrugarh Capital Complex.

Further, the cabinet approved career advancement benefits for Grade-IV employees working in schools. Eligible employees will now be considered for promotion to Grade-III posts. This decision involved amendments to the Assam Secondary Education (Provincialised Schools) Service (Amendment) Rules, 2026, to streamline the promotion procedure.

The MLA Local Area Development (MLALAD) Fund also received a boost. The annual allocation for each legislator has been increased from the existing ₹1 crore to ₹1.5 crore for the financial year 2026-27. This fund will be further raised to ₹2 crore annually from the financial year 2027-28 onwards. Additionally, the revised guidelines permit MLAs to utilise up to ten percent of their annual allocation for procuring community-benefit equipment, including cultural, religious, educational, sports, and disability-support items.

Why it matters

The DA and DR hike provides crucial financial relief to a large segment of the state’s workforce and retired personnel, impacting over eight lakh individuals. This adjustment helps mitigate the effects of inflation on their purchasing power.

The declaration of Dibrugarh as the Second State Capital Region marks a strategic move to decentralise governance and promote balanced regional development. Dibrugarh, often referred to as the “Tea City of India,” is a historical and economically significant town in Upper Assam. The ₹500 crore investment aims to bolster its infrastructure, urban planning, and administrative capabilities, strengthening its role as a major hub in eastern Assam.

The career advancement policy for Grade-IV school employees addresses a long-standing demand for structured progression opportunities for non-teaching staff in the education sector. This move is expected to boost employee morale and recognise their contributions by providing a clear pathway to Grade-III positions.

The enhancement of the MLALAD fund provides legislators with greater resources to undertake local development works in their constituencies, ranging from infrastructure projects like roads and drinking water to community assets. The expanded scope, allowing for the procurement of community equipment, directly benefits local institutions and vulnerable populations, fostering grassroots development.

Background

The Assam Cabinet meeting on June 5, 2026, was the first after a significant expansion of the state ministry earlier that day. Twelve new ministers were sworn in, including four new faces, bringing the total strength of the cabinet to seventeen, including the Chief Minister. This expansion followed the National Democratic Alliance’s (NDA) victory in the 2026 Assam Assembly elections.

The decision to increase Dearness Allowance is a periodic exercise undertaken by both central and state governments to adjust for inflation and maintain the real income of employees and pensioners. The Assam government generally aligns its DA rates with the Central Government’s updates, with the previous rate at 58 percent.

The concept of developing Dibrugarh as a “second capital” has been discussed for some time, with Chief Minister Himanta Biswa Sarma having previously announced intentions to upgrade the city. This move is often seen in the context of administrative decentralisation and political outreach, particularly in Upper Assam, which is considered the heartland of indigenous Assamese culture and identity. Dibrugarh has a rich history, dating back to the Ahom dynasty and playing a crucial role during the British colonial era as a hub for the tea industry.

Regarding Grade-IV employees, while provisions for promotion to Grade-III positions existed, a comprehensive framework governing the process had not been formally established. This led to instances where such promotions were challenging, as highlighted in past legal interpretations regarding the Assam Secondary Education (Govt. Schools) Service Rules, 2020. The recent cabinet decision aims to rectify this by approving necessary regulations.

The MLALAD fund has been a crucial tool for local development, with its allocation last revised in 2016. The current enhancement reflects a commitment to providing legislators with more resources to address the immediate needs of their constituencies and accelerate development projects.

Key details

The Dearness Allowance and Dearness Relief have been increased by two percentage points, moving from 58 percent to 60 percent of the basic pay. This revision is effective retrospectively from January 1, 2026, meaning employees and pensioners are entitled to arrears for the preceding months.

For Dibrugarh’s development as the Second State Capital Region, a fund of ₹500 crore will be provided over the next five years. This allocation will be channelled through the budgets of concerned line departments to carry out infrastructure development. The Second State Capital Region Development Authority-Dibrugarh (SCRDA-D) will be responsible for preparing regional and sectoral development plans.

The MLA Local Area Development Fund will see a phased increase:

  • For the financial year 2026-27: ₹1.5 crore per MLA.
  • From the financial year 2027-28 onwards: ₹2 crore per MLA annually.

Legislators can now recommend procurement of community-benefit equipment, but expenditure on these new activities is capped at ten percent of their annual allocation.

What’s next

The enhanced DA and DR rates are expected to be disbursed with the salary and pension for June 2026, payable in July. The state government has indicated that benefits under several government schemes, which were pending due to the non-passage of the budget, will be made available to the public from August 1, following the upcoming Budget Session of the Assembly set to begin on July 6.

The newly approved rules for the promotion of Grade-IV school employees to Grade-III posts will lay down detailed eligibility criteria, promotion procedures, and other service-related conditions, according to officials. The Dibrugarh Second Capital Complex Development Authority is expected to commence its work on planning and executing the development projects in the designated 20-kilometre radius region.

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