Over 52 lakh government employees will be benefited over the decision taken during the cabinet meeting held on Monday.
Decision of approving the hike of 7 per cent in DA for central government employees will be effective from Jul 1, 2012 and the employees would be entitled to arrears from that date.
The additional burden on the exchequer on account of increase in DA would be around Rs 5,000 crore for the eight-month period between Jul 2012 and Feb 2013. It will be Rs 7,400 crore for the full financial year.
The government had last increased DA last in March this year from 58 per cent to 65 per cent, which was effective from Jan 1, 2012. It will now be increased to 72 per cent.
The government periodically hikes the DA, which is linked to the consumer price index for industrial workers. The consumer price index (CPI) based on movement in retail prices soared to 10.03 per cent in August, from 9.86 per cent in Jul 2012.
The cabinet ministers are also expected to take a decision on computerisation of the Public Distribution System (PDS), a demand raised by Food Ministry which also seeks to digitise ration cards. Decision on a bailout package for state power distribution companies is also likely to be taken during the high profile cabinet meeting.
(With PTI inputs)