NEW DELHI: The Centre has hiked the dearness allowance (DA) of central government employees and pensioners by three percent. The decision was taken by the cabinet committee on economic affairs in a meeting chaired by Prime Minister Narendra Modi. The hike, based on the recommendations of the 7th Central Pay commission, will be effective from January 1 this year.

Currently, the DA of government employees and pensioners is 31 percent. With the hike, it will be raised to 34 percent, benefitting 47.68 lakh employees and 68.62 lakh pensioners.

The combined expenditure to the state exchequer will be 9,544.50 crore per annum. Dearness allowance is a component of the monthly salary which is paid to the employees to compensate for the increase in the cost of living due to inflation. The employees will receive the renewed DA along with their March salary. Last October, the Centre had hiked dearness allowance from 28 to 31 per cent.