The Union Cabinet could approve a proposal to merge dearness allowance (DA) with basic pay, benefiting about 50 lakh central government employees and 30 lakh pensioners.
The Cabinet may also hike dearness allowance (DA) by 10 per cent to 100 per cent.
As per practice, the DA is merged with basic pay when it breaches the 50 per cent mark. DA merger helps employees as their other allowances are paid as a proportion of basic pay.
The government had announced a hike of 10 per cent to 90 per cent in September last year, effective from July 1, 2013.
According to an official source, the preliminary assessment suggests that dearness allowance hike will not be less than 10 per cent and would be effective from January 1 this year.
As per practice, the government uses CPI-IW data of the past 12 months to arrive at a quantum for the purpose of any DA hike. Thus, the retail inflation for industrial workers between January 1 to December 31, 2013 would be used to take a final call on the matter.