New Delhi: The Union Cabinet on Monday approved a 7 percent hike in the Dearness Allowance (DA) for central government employees.
The approval will benefit 80 lakh central government employees and pensioners.
Earlier, the meetings of the Cabinet Committee on Economic Affairs (CCEA) and Cabinet Committee on Infrastructure (CCI), was scheduled for Friday but was postponed apparently due to political turmoil post the government’s ‘big bang’ reform announcement.
The hike in dearness allowance will be effective from July 1, 2012, and the employees would be entitled to arrears from that date.
The additional burden on exchequer on account of increase in DA would be around Rs. 5,000 crore for the eight-month period between July, 2012 and February, 2013. It will be Rs. 7,400 crore for the full financial year.
The government had last increased DA in March this year from 58 percent to 65 percent, which was effective from January 1, 2012. It will now be increased to 72 percent.
The government periodically hikes the DA, which is linked to consumer price index for industrial workers. The consumer price index (CPI) based on movement in retail prices, soared to 10.03 percent in August, from 9.86 percent in July.