dnsmasq is 2.76 as seen below. I had manually updated dnsmaq to the latest version. Now the only issue is that pihole-FTL fails to start automatically on system reboot.
pi@raspberrypi:~ $ dnsmasq -v
Dnsmasq version 2.76 Copyright (c) 2000-2016 Simon Kelley
Compile time options: IPv6 GNU-getopt DBus i18n IDN DHCP DHCPv6 no-Lua TFTP conntrack ipset auth DNSSEC loop-detect inotify
I really wanted to troubleshoot this but I read on another thread (lost link) that re-installing pihole after manually updating dnsmasq helped in some cases.
So I uninstalled and reinstalled pihole and FTL starts automatically on reboot. I added a comment on the update dnsmasq post in case it helps others: