Just a few days before imposition of the model code of conduct by the Election Commission, the government Friday announced 10 percent increase in dearness allowance that will benefit nearly eight million employees and pensioners.
With effect from Jan 1, 2014, dearness allowance of the central government employees is increased to 100 percent from the earlier 90 percent.
The decision was taken in a cabinet meeting chaired by Prime Minister Manmohan Singh. It will benefit some five million employees and three million pensioners.
"The Union Cabinet today approved the proposal to release an additional installment of dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners with effect from Jan 1, 2014, in cash, but not before the disbursement of the salary for the month of March 2014 at the rate of 10 percent increase over the existing rate of 90 percent," an official statement released after the cabinet meeting said.
The combined impact on the exchequer on account of both dearness allowance and dearness relief would be Rs.11,074.80 crore per annum and Rs.12,920.60 crore in the financial year 2014-15 (i.e. for a period of 14 months from January 2014 to February 2015).
"The increase is in accordance with the accepted formula based on the recommendations of the 6th Central Pay Commission," the statement said.
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The decision came a few days before the imposition of the model code of conduct by the Election Commission.
The Election Commission is likely to announce the schedule for the upcoming general election in a few days, most likely next week. The code of conduct come into force with the announcement of the election schedule.