Government is likely to approve a hike in dearness allowance (DA) by 7% to 107% this month. The pensioners will also gain as the benefit provided to them as dearness relief will be hiked to 107 per cent of basic pay. This will benefit around 30 lakh Centre's employees and its 50 lakh pensioners including dependents. 

The revised Consumer Price Index-Industrial Workers data for June was released by Labour Ministry on last day of August.  The Finance Ministry will now put a Cabinet proposal for approval of 7% DA hike from July 1 this year. 

Last time the  DA was increased increased by 10% to 100% with effect from January 1, 2014, on February 28. 

The unions are pressing for the long pending demand of merger of DA with basic pay. "The erosion of value of wages is unbearable at 50 per cent dearness allowance. Now it will be 107 per cent. It is high time to merge DA with basic pay to provide relief to employees," Confederation of Central Government Employees' President K K N Kutty told PTI. 

"We had summited our memorandum in this regard to 7th Pay Commission. They forwarded it to Central Government. We have apprised about the issue to the newly elected NDA government. But no decision has been taken so far," he said. 

With merger of DA with basic pay, the salary and allowances paid in proportion of basic pay are increased. As per earlier practise DA was merged with basic pay once it breached 50 per cent mark. But 6th Pay Commission has disallowed that.