New Delhi: In Rs 9,700-crore sop, the Centre on Monday hiked Dearness Allowance (DA) by 7 percent for its employees and pensioners, and allowed pension proposals for personnel of armed forces.
The hike in DA to 72 percent of basic pay will be effective from July 1, 2012, and the arrears are entitled from this date.
"The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief (to pensioners) would be of the order of Rs 7,408.24 crore per annum and Rs 4,938.78 crore (for the remaining part of) the financial year 2012-2013," an official release said.
The decision, which was approved by the Union Cabinet, will benefit about 50 lakh employees and 30 lakh pensioners of the central government.
The increase in DA is in accordance with the accepted formula which is based on the recommendations of the 6th Central Pay Commission, the release added.
The relief comes in the backdrop of government increasing the diesel price by Rs 5 per litre and retail inflation crossing the double-digit mark.
The Union Cabinet also approved four proposals related to pensioners from armed forces. These would cost the exchequer Rs 2,300 crore annually.
Services personnel who have retired before January 2006, will now be entitled to pension almost equal to their counterparts who superannuated after this date.
"This largely meets the demands of the defence pensioners on 'one-rank-one-pension'," another official release said.
The government said that dual family pension would be allowed in present and future cases.
For ex-servicemen, the Cabinet also allowed grant of family pension to mentally and physically challenged children "who drew, are drawing or may draw would continue even after their marriage".
The government periodically hikes the DA, which is linked to consumer price index for industrial workers. The all-India Consumer Price Index for June, 2012 worked out to be 199.58, which constituted an increase of 72.40 percent over the base index of 115.76 (as on January 1, 2006).
The consumer price index (CPI), based on movement in retail prices, soared to 10.03 percent in August, from 9.86 percent in July.
As regards the financial implications, the annual burden on exchequer would be Rs 4,338 crore on account of increase in DA for employees and Rs 3,070 crore towards pensioners.
The burden during the remaining part of the current fiscal has been estimated at Rs 2,892 crore on account of additional payment to employees and Rs 2,046 crore to pensioners.
First Published: Monday, September 24, 2012, 09:20