The Union cabinet is expected to approve a 2-3% hike in dearness allowance when its meets on Thursday.
If approved, it will be the first hike in the allowance — that seeks to insulate employees from inflation — after the government implemented the recommendations of the Seventh Pay Commission.
Employee unions have been demanding a 3% hike – higher than the proposed 2%. A government official said the decision on the unions’ demand would be taken at the meeting chaired by Prime Minister Narendra Modi on Thursday.
The dearness allowance is announced every six months and was due in September. It was, however, put off since the finance ministry had just given employees a pay hike.
The announcement has been timed to brighten the faces of government employees ahead of Diwali, over the weekend. The money, including arrears for the first six months of 2016, will however take another month to reach the bank accounts of employees.