In a 'Holi' bonanza to central government employees and pensioners, the Union Cabinet on Thursday decided to increase the dearness allowance by three per cent.
The Cabinet meeting, chaired by Prime Minister Manmohan Singh, decided to increase the allowance from 14 per cent to 17 per cent.
Briefing reporters after the meeting, Information and Broadcasting Minister S Jaipal Reddy said the increase would come into force with restrospective effect from January 1 this year.
The hike would result in an annual expenditure of Rs 1608 crore (Rs 16.08).
He said for the year 2005-06, the annual expenditure would be pegged at a higher amount of Rs 1874.28 crore (Rs 18.74 billion) because it was being applied with retrospective effect.
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