The Cabinet may consider raising dearness allowance (DA) for Central Government employees and pensioners by 10 per cent on Friday. It is also likely to discuss extending the cap on stockholding for pulses, edible oils and oilseeds up to September 30, 2014.

If approved, the increase in DA will be effective from July 1, which means additional income for existing and retired employees during the festival season. With the implementation of the proposal, the total DA on the basic salary will rise to 90 per cent for approximately 50 lakh existing employees.

There will be a similar increase in dearness relief for around 30 lakh Central Government pensioners. DA and dearness relief are revised twice a year. First from January 1 and then from July 1. The revisions are based on the change in the consumer price index for industrial workers (CPI-IW).

According to a source, the increase in DA to 90 per cent would result in additional annual expenditure of Rs 10,879 crore. There would be an additional burden of Rs 6,297 crore on the exchequer during 2013-14 on account of this hike.

If this hike comes through, it would be a double digit hike in DA after about three years. In September 2010, the Government had announced a hike of 10 per cent with effect from July 1, 2010. Then DA was hiked to 80 per cent from 72 per cent in April 2013, effective January 1, this year.

(This article was published on September 18, 2013)
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