Dearness Allowance hike October 2026: Ministry of Railways revises VDA rates for contract workers; check details

The Ministry of Railways has announced the revision of Variable Dearness Allowance (VDA) rates for contract workers engaged in various employments and activities, effective 1 October 2026. The Railway Board issued a letter dated 28 October, referring to the Labour Bureau’s revised VDA order dated 30 September, and directing railway authorities to ensure strict compliance with the prescribed minimum wage rates. Which contract workers are covered under the revised VDA rates?

According to the Railway Board's letter, the revised rates apply to contract workers engaged in the following employments:Construction and maintenance: Roads, runways, buildings, underground cables, electric lines, water supply lines and sewerage pipelines. Sweeping and cleaning: Excluding activities prohibited under the Employment of Manual Scavengers and Construction of Dry Latrines (Prohibition) Act, 1993. Watch and ward: Security duties with or without arms.

Loading and unloading: Goods sheds and parcel offices of railways, other goods sheds, go-downs, warehouses and other similar employments. The applicable wage rate depends on the employment category, skill level and area classification. What are revised VDA rates for contract workers?

The Labour Bureau's order revised the allowance based on the average Consumer Price Index for Industrial Workers (CPI-IW), which rose to 431.42 from 424.80 as of 30 June. This represents an increase of 6.62 index points. For loading and unloading workers, including those employed at goods sheds and parcel offices of railways, the revised VDA rates are:Area A: ₹317 per dayArea B: ₹267 per dayArea C: ₹215 per dayAreas A, B, and C refer to different cities and locations, as classified by the Labour Bureau to determine applicable minimum wage rates.

For example, Area A includes Ahmedabad, Delhi, Chennai, Noida, and other specified locations. The corresponding minimum daily wages, including basic wages and VDA, are ₹840 in Area A, ₹704 in Area B, and ₹565 in Area C.For construction workers, the VDA rates vary by skill category. Unskilled workers are eligible for ₹317, ₹267 and ₹215 per day in Areas A, B and C, respectively.

For highly skilled workers, the corresponding rates are ₹418, ₹387 and ₹354 per day. What has Railway Board directed? The Ministry of Railways letter states, “Railways, being Principal Employer, are required to ensure that the contractors are complying with the provisions of the Labour codes strictly and arranging prescribed minimum wages to the contract labourers.”It further directs that the revised rates are applicable with effect from 1 October 2026.

Disclaimer: This is for informational purposes only. Please refer to the official website for the latest updates and applicable rules.