In a much-awaited relief to the Central government employees, the Union Cabinet on Thursday cleared a proposal to increase dearness allowance from 72 to 80 per cent.

The increase, effective from January 1, 2013, will benefit about 50 lakh employees and 30 lakh pensioners, who will also be entitled to arrears.

According to an official statement here, the combined impact on the exchequer on account of an additional instalment of DA to Central government employees and Dearness Relief (DR) to pensioners with effect from January 1 this year would be Rs.8,629.20 crore per annum and Rs. 10,067.36 crore in the financial year 2013-14 (that is for a period of 14 months from January 2013 to February 2014).

The last increase in DA to 72 per cent was announced in September last year and it came into effect from July 1, 2012.

The Cabinet deferred a decision on the DA issue earlier this month as Finance Minister P. Chidambaram was then on an official visit to Japan. “The proposal on DA has been deferred as the Finance Minister was not present,” Information and Broadcasting Minister Manish Tewari told reporters after the Cabinet meeting chaired by Prime Minister Manmohan Singh here on April 2.

This will benefit about 50 lakh employees and 30 lakh pensioners