"The Union Cabinet will take up for discussion and approval a proposal to increase dearness allowance to 90 per cent at its meeting scheduled on September 20. The hike would be effective from July 1, this year," a source said.

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

There would be a double digit hike in DA after about three years. It was last in September, 2010, that the government had announced a hike of 10 per cent to be given with effect from July 1, 2010.

DA was hiked to 80 per cent from 72 per cent in April, 2013, effective from January 1, this year.

As per the practice, the government uses CPI-IW data for past 12 months to arrive at a number for the purpose of any DA hike.The retail inflation for industrial workers between July, 2012 to June 2013 was used to compute the increase in DA.

PTI