Union Cabinet approved the proposal to increase dearness allowance (DA) to 80%, from existing 72%, benefiting about 50 lakh employees and 30 lakh pensioners of the central government. The hike would be effective from January 1, 2013 and the employees and pensioners will be entitled to arrears. The government had raised DA to 72% in September last year, which had come into effect from July 1, 2012.
It had come into effect from July 1, 2012. As per the practice, the DA is merged with basic pay when it breaches the 50 per cent cap. This helps employees get higher allowances as they are paid as proportion of the basic pay.