The decision to hike DA for its employees, and to provide dearness relief for pensioners, by 10 per cent to 100 per cent was taken by the Union Cabinet in its meeting held here.
"The Union Cabinet has approved the proposal to hike Dearness allowance for its employees and dearness relief for its pensioners to 100 per cent in its meeting held here," a source said.
This increase in the dearness allowance by the UPA-2 government comes ahead of the imposition of the model code of conduct by the Election Commission.
The code is likely to come into force with the announcement of the schedule for the forthcoming general elections in a week or so.
Also it would be the second double digit DA hike in a row. The government had announced a hike of 10 per cent to 90 per cent in September last year, effective from July 1, 2013.
The new hike in DA would be effective from the January 1 this year.
As per practice, the government uses Consumer Price Index- Industrial Workers data of the past 12 months to arrive at a quantum for the purpose of any DA hike. Thus, the retail inflation for industrial workers between January 1 to December 31, 2013 was used to take a final call on the matter.
According to the provisional data released by government on January 31, the retail inflation for factory workers in December was 9.13 per cent. The revised retail inflation data for January is scheduled to be released today.
An official had said earlier that the preliminary assessment suggests that DA hike will not be less than 10 per cent and would be effective from January 1.