The arrears is likely to be paid in three instalments benefiting close to four lakh teachers, sources said.
The HRD Ministry had earlier moved a proposal for the consideration of the Cabinet, seeking its approval for de-linking the release of assistance to state governments from the retirement age.
The UGC-initiated Sixth Pay commission package for teachers, based on which the scales of centrally funded institutes were revised, has a provision that requires raising the retirement age to 65.
The state governments had been opposing linking the retirement age issue with release of arrears arguing that it will put additional burden on them. A committee of secretaries had also supported the demand of state governments.
The state government will now have the flexibility in matters of raising the retirement age, the sources said.
The arrears were due as the Centre (which will bear 80 per cent of the increased arrears) had asked the states in 2008 to follow the pay scales that centrally funded institutes introduced in 2008 with retrospective effect from January 1, 2006.
