Union Cabinet is likely to approve today a proposal to increase dearness allowance (DA) to 80 per cent from existing 72 per cent benefiting about 50 lakh employees and 30 lakh pensioners of the central government.
“The Union Cabinet may consider the finance ministry proposal to increase DA in its meeting scheduled for Thursday,” a source said, adding the hike would be effective from January 1, 2013 and employees and pensioners would be entitled to arrears.
The hike would be effective from January 1, 2013 and the employees and pensioners would be entitled for arrears, he said.
The government had hiked DA to 72 per cent in September last year, which had come into effect from July 1, 2012.
As per the practice, the DA is merged with basic pay when it breaches the 50 per cent cap. This helps employees get higher allowances as those are paid as proportion of the basic pay.