NEW DELHI: The government on Friday approved a proposal to hike dearness allowance to 90% from existing 80%, a move that would benefit about 50 lakh central government employees and 30 lakh pensioners.
"The Union Cabinet approved the proposal to increase dearness allowance to 90% at its meeting. The hike would be effective from July 1, this year," a source said.
According to the source, the increase in DA to 90% would result in additional annual expenditure of Rs 10,879 crore. There would be additional burden of Rs 6,297 crore on exchequer during 2013-14 on account of this hike in DA.
This is a double digit hike in DA after about three years. It was last in September, 2010, that the government had announced a hike of 10% to be given with effect from July 1, 2010.
DA was hiked to 80% from 72% in April, 2013, effective from January 1, this year.
As per the practice, the government uses CPI-IW data for past 12 months to arrive at a number for the purpose of any DA hike.
The retail inflation for industrial workers between July, 2012 and June 2013 was used to compute the increase in DA.