The Cabinet on Wednesday approved a proposal to increase dearness allowance to 119 percent from 113 percent, which will potentially benefit over one crore government employees and pensioners.
Earlier in April, the government had hiked DA by 6 percent to 113 percent of their basic pay with effect from January. DA is paid as proportion of the basic pay.
The DA hike will take effect from July 1. As per the agreed formula, the DA rate increase is an average of 12-month consumer price index-industrial workers from July 1, 2014 to June 30, 2015.
The hike is in accordance with the accepted formula based on the recommendations of the 6th Pay Commission, which will benefit 48 lakh government employees and 55 lakh pensioners.
Last month, the Cabinet had given approval for the extension of the term of the 7th Central Pay Commission by four months up to December 31.