The proposal will cost the exchequer a total of Rs 16,000 crore.
The Cabinet has hiked dearness allowance by 5 percent, Union Minister Prakash Javdekar announced on October 9.
The move raises dearness allowance (DA) to 17 percent from 12 percent, and is likely to benefit 50 lakh government employees and 62 lakh pensioners.
"This is the highest ever 5 percentage points increase in DA in one go by the central government," Javdekar said.
The proposal will cost the exchequer a total of Rs 16,000 crore. The increase will be applied retroactively from July 2019.
Dearness allowance is a cost of living adjustment allowance paid to government employees, public sector employees and pensioners and is calculated as a percentage of basic salary to mitigate the impact of inflation."This is a Diwali gift to employees," Javdekar said during a Cabinet briefing.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .