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The move benefits around three million employees and five mn pensioners. It will cost the exchequer Rs 5,127 crore in the rest of the current financial year and Rs 7,691 crore in a year.
The increase is in accordance with the accepted formula, based on recommendations of the 6th Central Pay Commission. According to the formula, DA is calculated on the basis of the 12-month average of the Consumer Price Index for Industrial Workers. The average rate of retail inflation for industrial workers from July 1, 2013, to June 30, 2014, was 7.25%.
Therefore, the central government decided to raise the DA by seven%.
The previous government had increased DA to 100% from 90% of basic pay with effect from January 1, 2014, on February 28.
The cabinet also approved a memorandum of understanding for cooperation in traditional systems of medicine and homoeopathy between India and Bangladesh.
Total export of Indian systems of medicine products were Rs 2,168 crore in 2012-13. Those to Bangladesh were Rs 31.9 crore in 2013-14.
