Modi Cabinet Greenlights DA Hike, Railway Expansion, PMGSY Extension and Maritime Insurance Pool

NEW DELHI — The Union Cabinet, chaired by Prime Minister Narendra Modi, on Saturday approved a clutch of wide-ranging decisions — raising dearness allowance for over a crore government employees and pensioners, clearing two major railway multitracking projects across Uttar Pradesh and Andhra Pradesh, extending the flagship rural roads scheme, and establishing a first-of-its-kind domestic maritime insurance pool backed by sovereign guarantee.

AT A GLANCE — KEY FIGURES

WAGES & PENSIONS

Government employees to receive 2% DA hike effective January 1

The Cabinet approved a 2 percentage point increase in Dearness Allowance and Dearness Relief, raising the rate from 58% to 60% of basic pay or pension with effect from January 1, 2026. The revision, calculated in line with the 7th Central Pay Commission formula, will benefit approximately 50.46 lakh Central Government employees and 68.27 lakh pensioners. The combined annual burden on the exchequer is estimated at ?6,791.24 crore.

INFRASTRUCTURE

Two rail multitracking projects to add 601 km and ease congestion on key corridors

The Cabinet Committee on Economic Affairs cleared two railway projects at a total estimated cost of ?24,815 crore, to be completed by 2030–31. The Ghaziabad–Sitapur third and fourth line (403 km, ?14,926 crore) will relieve a corridor where capacity utilisation has already reached 168% and is projected to hit 207% without intervention. The project traverses nine districts of Uttar Pradesh, including the industrial hubs of Ghaziabad, Moradabad and Bareilly.

The second project, the Nidadavolu–Duvvada third and fourth line (198 km, ?9,889 crore) in Andhra Pradesh, forms part of the quadrupling of the Howrah–Chennai High Density Network. The alignment includes a 4.3 km rail bridge over the Godavari River and is about 8 km shorter than the existing route. Together, the two projects are expected to generate 409 lakh human-days of employment and save logistics costs of over ?4,000 crore annually compared to road transport.

PROJECT SUMMARY

RURAL DEVELOPMENT

PMGSY-III extended to March 2028, outlay raised to ?83,977 crore

The Union Cabinet approved a three-year extension for Pradhan Mantri Gram Sadak Yojana-III, which was originally scheduled to conclude in March 2025. The revised outlay stands at ?83,977 crore — up from ?80,250 crore. Roads and bridges in plain areas and roads in hilly regions will be completed by March 2028; bridges in hilly areas get an additional year until March 2029. The scheme focuses on upgrading through routes and major rural links connecting habitations to agricultural markets, higher secondary schools and hospitals. The Cabinet also cleared 161 long-span bridges pending sanction on already-approved road alignments.

SHIPPING & TRADE

India launches Bharat Maritime Insurance Pool with ?12,980 crore sovereign guarantee

In a move aimed at reducing India’s dependence on international protection and indemnity clubs, the Cabinet approved the formation of the Bharat Maritime Insurance Pool (BMI Pool), backed by a sovereign guarantee of ?12,980 crore. The pool will cover all maritime risk categories — hull and machinery, cargo, P&I, and war risk — for Indian-flagged or controlled vessels, as well as vessels carrying cargo to or from Indian ports through volatile maritime corridors. Combined underwriting capacity of the pool will be around ?950 crore. A dedicated Governing Body will oversee its formation and operations. Officials said the move was designed to insulate Indian trade against sanctions-driven coverage withdrawals and rising geopolitical risk.