Calcutta: The dearness allowance for state government employees in Bengal is expected to touch 125 per cent of the basic pay after the chief minister announced an 18 per cent hike with effect from January 1 next year.

Over 7 lakh employees, whose DA now adds up to 100 per cent of the basic pay, will benefit from the decision, which entails an additional expenditure of at least Rs 5,000 crore a year. Some officials put the figure at Rs 5,400 crore.

The hike means state government employees will from next year earn the same percentage of DA that central government staff started taking home two years ago. The gap in the dearness allowances is a key reason for the pay disparity between state and central government employees.

However, the central government employees are already earning on the basis of the Seventh Pay Commission's proposals. Bengal government employees now get paid according to the Fifth Pay Commission recommendations.

Chief minister Mamata Banerjee on Tuesday said there would be no difference between the state and central government employees in terms of benefits from next year.

If the state government implements the Sixth Pay Commission recommendations, it is expected to inflate the salary bill by Rs 30,000 crore, said a finance department official.

The Bengal DA will reach 125 per cent from 100 per cent in the new year partly because the chief minister said that an interim relief - announced soon after the Trinamul government returned to power in 2016 - would now be considered DA.

The interim relief translates into 7 per cent of the basic pay. Along with the 18 per cent hike announced on Tuesday, the cumulative DA will touch 125 per cent.

Calcutta High Court is hearing a petition from two employees' unions demanding the release of dearness allowance dues. The case is to be heard on July 3.

"The state government wanted to assure the court that action was being taken, and that's why the DA was announced six months before it would come to effect," an employee said.