The Union Cabinet had decided on February 28, to release an additional instalment of DA and dearness relief (DR) to pensioners with effect from January 1, 2014.
Thus, the Central government employees as well as pensioners are entitled for DA/DR at the rate of 100 per cent of the basic with effect from January 1, 2014.
"...The President is pleased to decide that DA payable to central government employees shall be enhanced from existing rate of 90 per cent to 100 per cent with effect from January 1, 2014," a Finance Ministry's office order said.
According to the official order, the additional instalment of DA payable under these orders shall be paid in cash to all central government allowance and payment of arrears of DA shall not be made before the date of disbursement of salary of March 2014.
In regard to armed forces personnel and railway employees, separate orders will be issued by the Ministry of Defence and Ministry of Railways, it said.
The government has estimated that the combined impact on exchequer on account of both DA and DR would be Rs 11,074.80 crore per annum. For a period of 14 months, from January 2014 to February 2015, the impact will be Rs 12,920.60 crore in the next financial year, 2014-15. (March salary gets paid in April, the first month of the new fiscal).
It is the second double digit DA hike in a row. The government had announced a hike of 10 per cent taking it up to 90 per cent in September last year, effective from July 1, 2013.
The increase in DA is in accordance with the accepted formula based on the recommendations of the 6th Central Pay Commission.