The Union government approved a six per cent increase in Dearness Allowance to its over 80 lakh employees and pensioners, although it would pinch its pocket by Rs 6,020 crore in the 14 months till February 2010.
The move would, however, put more money in the hands of the salaried class whose spending may boost the economy.
The employees and pensioners would get the DA with effect from January 2009 and payable with their salaries starting next month, as per a decision cleared by the Cabinet Committee on Economic Affairs (CCEA) in New Delhi.
It was only in September 2008 that government servants got higher salaries after the Centre implemented the sixth Pay Commission’s recommendations with some modifications.
The revised DA would be 22 per cent against 16 per cent at present, Home Minister P Chidambaram told reporters in New Delhi on Thursday after the CCEA meeting.
The combined burden of the increased DA to the working and retired employees will be Rs 6,020 crore in 14 months from January 2009 to February 2010.
However, the exchequer will take a hit of Rs 5,159 crore for a full year, he said.
The decision to increase DA was taken because of the rise in the consumer price index for industrial workers.
DA is revised twice a year, from 1st January and 1st July, payable in salaries of 1st March and 1st September, respectively.