The cabinet on Wednesday approved a 6 percent hike in Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners, effective from January 1.
The decision, over the existing rate of 119 percent of basic pay/pension of the employees to compensate them for general price rise, was taken at a cabinet meeting chaired by Prime Minister Narendra Modi.
This will benefit about 50 lakh government employees and 58 lakh pensioners, an official release said.
It said the increase was in accordance with the accepted formula, based on the recommendations of the sixth Central Pay Commission.
The combined impact on the exchequer on account of DA and DR would be Rs.6,796.50 crore per annum and Rs.7,929.24 crore respectively in 2016-17 (for a period of 14 months from January 2016 to February 2017).