The decision is expected to be approved by the Union Cabinet at its meeting later this week, those in know of the development said.
The move will benefit about 50 lakh employees and 30 lakh pensioners of the Central government to help them fight inflation.
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The current rate of DA is 72% of basic pay, which will be raised to 80%.
The government periodically hikes DA, which is linked to consumer price index for industrial workers. Inflatoin based on CPI (IW) has been in double digits of late.
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