About 50 lakh central government employees, hit by high inflation now at 8.31 per cent, will get some relief with cabinet deciding to hike their dearness allowance by 6 per cent retrospectively from January one this year.

Government employees now get 45 per cent of their basic pay as dearness allowance. With the 6 per cent hike, they would now get 51 per cent of their basic as DA, finance minister Pranab Mukherjee told reporters after the cabinet decision on Tuesday.

The 38 lakh government pensioners too would benefit as result of the hike which is in accordance with the formula prescribed by the sixth pay commission for central government employees. The impact of the hike to the exchequer will be Rs 5,715.90 crore per annum. From January 2011 to March 2012, taking into account the whole of next fiscal, the financial burden would work out to be Rs 6,668.52 crore.

The DA is revised twice a year, on January 1 and July 1. The Consumer Price Index (Industrial Workers), which is the basis for revising dearness allowance, was 9.47 per cent in December and 9.30 per cent in January. Inflation has been stubbornly high in India during the last two years, with food inflation in double digit

figures. It has, however, started slowing down since it peaked at around 20 per cent in December. Now it is at 9.42 per cent.