File photo. Photograph:( AFP )
The decision will cost the exchequer Rs 16,000 crore, Information and Broadcasting Minister Prakash Javadekar said while briefing media on the decisions taken by the Cabinet.
The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved to release an additional installment of Dearness Allowance to Central Government employees and Dearness Relief to pensioners with effect from July 1, 2019 representing an increase of five per cent over the existing rate of 12 per cent of the basic pay or pension, to compensate for price rise.
It will benefit about 49.93 lakh central government employees and 65.26 lakh pensioners and represents an increase of 5 per cent over the existing rate of 12 per cent of the basic pay/pension to compensate for price rise.
The impact of the increase in Dearness Allowance and Dearness Relief would be Rs 15909.35 crore per annum and Rs 10606.20 crore in this financial year.
An official release said the increase is in accordance with the accepted formula, which is based on the recommendations of the Seventh Central Pay Commission.
Dear Allowance and Dearness Relief is paid to central government employees and pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real value. Dear Allowance and Dearness Relief is revised twice a year from January 1 and July 1.
(With inputs from ANI)