New Delhi, Mar 24 (IANS): In a bonanza for 48 lakh Central government employees and 70 lakh pensioners, the government on Friday hiked dearness allowance (DA) and dearness relief (DR) by 4 per cent with retrospective effect from January 1, 2023.

The decision was taken in the Union Cabinet meeting on Friday evening.

According to official sources, the additional instalment will represent an increase of 4 per cent over the existing rate of 38 per cent of the basic pay or pension, to compensate against price rise.

The cabinet gave its approval to release an additional instalment of DA to Central government employees and DRA to pensioners with effect from January 1, 2023, they added.

The combined impact on the exchequer on account of both DA and DR would be Rs 12,815.60 crore per annum, the sources added.

This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

DA is calculated as per the latest consumer price index for industrial workers. It is revised periodically twice a year and was last revised in September 2022, and was effective retrospectively from July 1, 2022.