The government is likely to approve on Tuesday a four per cent hike in Dearness Allowance to central government employees and pensioners, which will cost the exchequer Rs 1460 crore (Rs 14.6 billion) in a full year.
The finance ministry's proposal is listed to come up before the Cabinet, official sources said on Monday, adding the proposed hike is to be effective retrospectively from July 1.
The additional financial burden for the current fiscal is estimated to be Rs 970 crore (Rs 9.7 billion), the sources said.
Giving the breakup, sources said the DA hike to government employees would cost the exchequer Rs 700 crore (Rs 7 billion) this year and an additional Rs 150 crore (Rs 1.5 billion) in a full year.
Likewise, the DA hike to central government pensioners would cost Rs 270 crore (Rs 2.7 billion) this year and Rs 400 crore (Rs 4 billion) in full year.
The DA and DR are indexed to inflation and payable to government employees and pensioners twice a year.