The Union Cabinet on Tuesday approved an addition in Dearness Allowance (DA) for central government employees and an increase in dearness relief for pensioners. The current rate of 9 percent has been increased by 3 points to 12 percent and will be effective from 1 January 2019.

"The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to the release of an additional instalment of Dearness Allowance (DA) to Central Government employees, and Dearness Relief (DR) to pensioners w.e.f. 1.1.2019 representing an increase of 3% over the existing rate of 9% of the Basic Pay/Pension, to compensate for price rise," the statement said.

The release further said that the combined effect of DR and DA would cost the Central Government Rs 9,168.12 crore per annum and Rs 10,696.14 crore in the financial year 2019-20, that is for a period of 14 months from January 2019 to February 2020. This increase is expected to benefit about 48.41 lakh Central Government employees and 62.03 lakh pensioners.

This increase comes within 6 months of the previous hike. In August last year, the government had approved a 2 percent increase in Dearness Allowance from the then existing 7 percent on basic pay or pension for the Central Government employees and was effective from 1 July 2018.