The Union Cabinet on Monday approved the release of an additional instalment of dearness allowance (DA) to Central government employees and dearness relief (DR) to pensioners with effect from July 1, 2012.

The additional DA/DR instalments, marking an increase of 7 per cent compared to the existing rate of 65 per cent, to 72 per cent of the basic pay/pension, in accordance with the recommendations of the Sixth Pay Commission, will benefit approximately 50 lakh employees and 30 lakh pensioners.

While the combined impact on the Exchequer on account of the pay-out works out to approximately Rs. 7,408.24 crore in a full fiscal year, the additional burden in the eight months of 2012-13 — from July 2012 to February 2013 — will be Rs. 4,938.78 crore.

As for the financial implications with regard to the compensation against price rise, the annual burden on the Exchequer works out to Rs. 4,338 crore on account of the hike in DA for employees, and Rs. 3,070 crore for pensioners. For the eight months of this fiscal year, the additional burden on the Centre has been estimated at Rs. 2,892 crore for its employees and approximately Rs. 2,046 crore for pensioners.

In March, the government raised the DA/DR quantum from 58 % to 65 % of the basic pay/pension, with effect from January 1, 2012.

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