Over four million workers of central government will go home with a growth pay packet from now, as the union cabinet has yesterday announced a growth in the dearness allowance [DA] to 65 percent of the basic salary from the present 58 percent with immediate effect from 1 January 2012.

The growth of about 7 percent from the existing rates will also be applicable to central government pensioners.

Meanwhile, the hike in the DA will cost the central government an extra burden of Rs 7,474.53 crore per year, as per the decision taken at the cabinet meeting headed by the Prime Minister of India, Manmohan Singh in New Delhi.

Further, the hike in the allowance will put extra burden on the central government of Rs 7,474.53 crore per year, as per the decision taken at the cabinet meeting headed by the Prime Minister Manmohan Singh in New Delhi.

Moreover, for the coming 14-months of period starting from January 2012 to February next year, the growth will generate a bill of Rs 8,720.32 crore.

In a note released to the media about the bill, “The union cabinet today (Friday) gave its approval to release an additional instalment of dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners with effect from Jan 1, 2012, representing an increase of seven% over the existing rate of 58% of the basic pay/pension, to compensate for price rise.”

The hike is in support with the accepted formula, which is implemented on the recommendations of the Sixth Central Pay Commission.

The report said, “The combined impact on the exchequer on account of both dearness allowance and dearness relief would be of the order of Rs.7474.53 crore annually and Rs 8720.32 crore in the financial year 2012-13 (for a period of 14 months from January 2012 to February 2013).”