Union Finance Ministry on Monday said that notification in this regard is expected to be issued this week.
The government is to notify its decision to give dearness allowance (DA) and dearness relief (DR) to 4 per cent from existing 2 per cent from January 1, 2017, benefiting 48.85 lakh is employees and 55.51 lakh pensioners.
The Finance Minister Arun Jaitley moved the cabinet note on March 16 for approval of releasing of an additional instalment of 2 per cent of dearness allowance (DA).
The DA/DR has been increased by 2 per cent over the existing rate of 2 per cent of the basic pay/pension to compensate for price rise and it is in accordance with the accepted formula based on the recommendation of 7th pay commission.
The combined impact on the exchequer on account of both dearness allowance and dearness relief would be Rs 5,857.28 crore per annum and Rs 6,833.50 crore in the Financial Year 2017-18 (for a period of 14 months from January, 2017 to February, 2018).
The hike in the DA/DR is as per the agreed methodology of taking average of Consumer Price Index-Industrial Workers for the past 12 months.
The Confederation of Central Government Employees had termed it as a meagre hike in view of actual rise in cost of living index saying the CPI-IW was far from reality.
The union had also said that there was a lot of variation in the rates of price rise of commodities by Ministry of Agriculture and CPI-IW.