New Delhi/IBNS: Ahead of the Lok Sabha elections due to take place in the next 2-3 months, the Union Cabinet chaired by Prime Minister Narendra Modi approved a hike in Dearness Allowance (DA) of 4 percent to Central Government employees and Dearness Relief (DR) to pensioners with effect from January 1 this year.

The government has given an increase of 4 percent over the existing rate of 46 percent of the basic pay or pension to compensate for the price rise, an official statement said.

The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs. 12,868.72 crore per annum.

This will benefit about 49.18 lakh Central Government employees and 67.95 lakh pensioners.

"This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission," the statement added.