The Cabinet on Thursday approved a six per cent hike in the dearness allowance paid to central government employees and pensioners, entailing additional expenditure of Rs 6,020 crore (Rs 60 billion) till March 31, 2010.
"The hike will be effective Jan 1 and will be payable from March 1," Home Minister P Chidambaram said.
He was briefing reporters after a cabinet meeting chaired by External Affairs Minister Pranab Mukherjee in the absence of Prime Minister Manmohan Singh, who is recuperating from coronary bypass surgery.
"The outgo for fiscal 2009-10 will be Rs 5,149 crore. For the 14 months from January, the outgo will be Rs 6,020," Chidambaram added.
There are some four million central government employees and some three million pensioners.