On the eve of Holi, the government on Wednesday hiked dearness allowance (DA) by 6 percent, benefiting over 1 crore central government employees and pensioners.
The hike, effective from 1 January 2016, will cost the exchequer an additional Rs 14,724.74 crore annually, Telecom Minister Ravi Shankar Prasad told reporters after the Union Cabinet meeting took the decision.
The burden on the exchequer would be Rs 6,795.5 core towards central government employees and Rs 7,929.24 crore towards pensioners during 2016-17, he said.
The DA, which will benefit 50 lakh central government employees and 58 lakh pensioners, will go up from the existing 119 percent to 125 percent.
Dearness allowance is paid as a portion of basic pay of employees to neutralise the impact of inflation. Pensioners get dearness relief. The central government revises DA twice in a year on the basis of one year average of retail inflation for industrial workers as per a pre-determined formula.
In September last year, DA was increased to 119 per cent from 113 per cent with effect from July 1, 2015.
In April last year, the government had hiked DA by 6 percentage points to 113 per cent of the basic pay with effect from January 1, 2015.
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)