The Union Cabinet on Thursday approved a two per cent hike in Dearness Allowance (DA) for central government employees and dearness relief (DR) for pensioners, effective from July 1.
The decision, taken at a cabinet meeting chaired by Prime Minister Narendra Modi, will benefit about 50. 68 lakh government employees and 54. 24 lakh pensioners.
"The cabinet has given its approval to release an instalment of DA to central government employees and DR to pensioners from July 1, 2016, representing an increase of 2 per cent of the revised basic pay/pension, to compensate for price rise, " a statement read.
"The increase is in accordance with the accepted formula, based on 7th Central Pay Commission recommendations, " it added.
The cumulative effect of the hike on the exchequer will be Rs 5, 622. 10 crore per annum.
The amount will be Rs 3, 748. 06 crore for eight months (July 2016 to February 2017) of the 2016 - 17 fiscal, the statement said.