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Centre is likely to announce next month a hike in dearness allowance (DA) by 10 per cent to 100 per cent, benefiting about 50 lakh employees and 30 lakh pensioners.
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.
According to an official source, the preliminary assessment suggests that dearness allowance hike will not be less than 10 per cent and would be effective from January 1 this year.
He said the exact percentage hike in DA could be calculated only when the revised all India Consumer Price Index for Industrial Workers (CPI-IW) for December is released on February 28.
According to the provisional data released by government on January 31, the retail inflation for factory workers for the month of December stood at 9.13 per cent.
As per practice, the government uses CPI-IW 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 would be used to take a final call on the matter.
"It would be 10 per cent this time and would be announced in March," Confederation of Central Government Employees President K K N Kutty told PTI.
"Besides, raising DA to 100 per cent, the government should revise the pay and merge DA with basic pay", he said.
As per practice, the DA is merged with basic pay when it breaches the 50 per cent mark. DA merger helps employees as their other allowances are paid as a proportion of basic pay.
Mr Kutty informed the central government employees would go on a two-day strike from February 12 and demand pay revision which would be possible through constituting the 7th Pay Commission. The government has announced setting up of the commission last year.
He said: "This DA hike won't help much as actual rise in the cost of living is about 300 per cent as on January 1, 2014. But they would pay us 100 per cent as DA."