In a bid to provide relief from high inflation, the government today increased dearness allowance (DA) by 6% to 51%, benefiting over 50 lakh central government employees and 38 lakh pensioners.
"The decision to hike DA was taken by the Union Cabinet at its meeting here," a Union minister said.
The combined impact of the hike will be Rs 5,715.90 crore per annum. However in the next financial year, the burden on the exchequer would be Rs 6,668.52 crore after the additional 6% DA payout is factored in from January 1 to March 31 this year.
The increased DA, which will be effective from January 1, is provided to government staff and pensioners to compensate them for rising prices.
Presently, the DA is paid at 45% of basic pay. The increase in DA by 6% would be in accordance with the formula prescribed by the Sixth Pay Commission for central government employees.
The decision will provide direct relief to around 50 lakh employees and 38 lakh pensioners.
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The DA is revised twice a year, on January 1 and July 1.
The relief came amid high retail prices, as inflation has been ruling above 9%.
The Consumer Price Index (Industrial Workers), which is the basis for revising dearness allowance, was 9.47% in December and 9.30% in January.
Headline inflation, based on movement in wholesale prices, was 8.31% in February, much above the comfort level of 5-6%. Food inflation, too, was hovering above 9%.