Bhubaneswar: The Union Cabinet, chaired by Prime Minister Narendra Modi, today approved a 3 per cent hike in the dearness allowance (DA) for Central government employees and dearness relief (DR) for pensioners.

The hike will be implemented retrospectively from July 1. The 3 per cent hike over the existing rates of 60 per cent of the basic pay/pension will compensate against price rise, said the Centre.

The combined impact on the exchequer on account of increase in both dearness allowance and dearness relief would be Rs 10,016.10 crore per annum.  This will benefit about 48.54 lakh central government employees and 68.71 lakh pensioners.

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