The Centre on Thursday notified its decision to raise dearness allowance (DA) to 100 percent, from 90 percent, benefiting its 50 lakh employees and 30 lakh pensioners.

The Union Cabinet had decided on 28th February, to release an additional instalment of DA and dearness relief (DR) to pensioners with effect from 1st January 2014.

Thus, the Central government employees as well as pensioners are entitled for DA/DR at the rate of 100 percent of the basic with effect from 1st January 2014.

“…the President is pleased to decide that DA payable to central government employees shall be enhanced from existing rate of 90 per cent to 100 per cent with effect from January 1, 2014,” a Finance Ministry’s office order said on Thursday.

According to the official order, the additional instalment of DA payable under these orders shall be paid in cash to all central government allowance and payment of arrears of DA shall not be made before the date of disbursement of salary of March 2014.

In regard to armed forces personnel and railway employees, separate orders will be issued by the Ministry of Defence and Ministry of Railways, it said.

The government has estimated that the combined impact on exchequer on account of both DA and DR would be Rs 11,074.80 crore per annum.

For a period of 14 months, from January 2014 to February 2015, the impact will be Rs 12,920.60 crore in the next financial year, 2014-15.

(March salary gets paid in April, the first month of the new fiscal). It is the second double digit DA hike in a row.

The government had announced a hike of 10 percent taking it up to 90 percent in September last year, effective from 1st July 2013.

The increase in DA is in accordance with the accepted formula based on the recommendations of the 6th Central Pay Commission.