This would put an extra burden of Rs 4355.35 crore per annum on the exchequer. A decision to this effect was taken by the Union Cabinet at its meeting chaired by the Prime Minister here on Thursday.

In view of the current fiscal situation and the likely pressure on government resources because of a weak monsoon, the Centre had decided to cut down wasteful spending while stressing the need for rationalisation.

However, Information and Broadcasting Minister Ambika Soni, while briefing newspersons, said the decision to release an additional installment of DA and DR has been taken to compensate the employees as well as pensioners for price rise.
The five per cent increase  in DA and DR would be over the existing rate of 22 per cent of the basic pay or pension, the minister said.

This is in accordance with the accepted formula, based on the recommendations of the Sixth Pay Commission. However, the combined impact on the exchequer would be Rs 2903.55 crore in the current financial year 2009-10. This is a second bonanza for the Central government employees and pensioners .