The proposal to increase the DA from 65 per cent to 72 per cent is likely to be taken up by the Union Cabinet tomorrow, sources said.
The decision, which would benefit about 50 lakh of employees and 30 lakh pensioners of the central government, comes in the backdrop of government increasing the diesel price by Rs 5 per litre and retail inflation crossing the double digit mark.
The hike, once approved, will be effective from July 1, 2012, and the employees would be entitled for arrears from this date.
The government had increased DA last in March this year from 58 per cent to 65 per cent, which was effective from January 1, 2012.
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 per cent in August, from 9.86 per cent in July.
In order to protest against the hike in diesel prices, coupled with the decision to operationalise the FDI in multi-brand retail, the opposition parties have called for a nation-wide strike today.
