New Delhi, Sept. 24: The Union cabinet today hiked the dearness allowance of central staff by 7 per cent, the second revision in six months coming against the backdrop of higher diesel prices and double-digit retail inflation.
The hike will be effective from July. It will benefit about 3.4 million central government employees and an equal number of pensioners.
Officials said the move was based on changes in the retail price index and would cost the exchequer Rs 4938.78 crore for the eight-month period between July 2012 and February 2013. The additional burden for the full financial year will be Rs 7,408.24 crore, according to an official release.
The Centre had hiked DA this March from 58 per cent to 65 per cent, effective from January. It will now go up to 72 per cent.
The government periodically hikes the allowance, which is linked to consumer price index (CPI) for industrial workers. The CPI — which is based on swings in retail prices — jumped to 10.03 per cent in August from 9.86 per cent in July.
The hike is in line with the formula based on the Sixth Central Pay Commission recommendations, the release added.
The release offered a break-up of the financial impact. An additional Rs 4,338 crore will have to be paid annually to employees and Rs 3,070 crore to pensioners. For the eight months of this financial year, the figures will be Rs 2,892 crore and Rs 2,046 crore respectively.