The Union Cabinet is likely to approve a proposal to increase dearness allowance (DA) of central government employees by 8% on Thursday.
The move to increase DA from 72% to 80% will benefit around 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 government had raised DA to 72% in September last year, which had come into effect from July 1, 2012. As per usual practice, DA is merged with basic pay when it breaches the 50% cap. This helps employees get higher allowances as those are paid as proportion of the basic pay.
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