The Cabinet has approved a 2 percent hike in Dearness Allowance (DA) and Dearness Relief (DR) that will benefit the over 48.41 lakh employees and 62.03 lakh pensioners of the central government.

An official press release said, "The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has approved to release an additional installment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.07.2018 representing an increase of 2% over the existing rate of 7% of the Basic Pay/Pension, to compensate for price rise."

The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.6112.20 crore per annum and Rs.4074.80 crore in the financial year 2018-19 (for a period of 08 months from July 2018 to February 2019).

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