The Union Cabinet on Friday approved the release of an additional installment of dearness allowance for central government employees and dearness relief for pensioners, effective from January 1, 2025. This decision provides a two percent increase over the existing rate of 53 percent of basic pay or pension, helping to offset the impact of rising prices.

The move is expected to benefit approximately 48.66 lakh central government employees and 66.55 lakh pensioners across the country. The total financial burden on the government due to this increase in dearness allowance and dearness relief is estimated to be Rs. 6,614.04 crore per year.

This increase follows the accepted formula recommended by the 7th Central Pay Commission, which ensures that government employees and pensioners receive adequate financial support to cope with inflation.