Central government employees and pensioners will get 6% more dearness allowance, a step that would entail a burden of Rs 2,189.96 crore during the rest of the current financial year and Rs 3,284.94 crore in a full year.

The increase in DA will be effective from July 1, 2007. The rate of DA from July 1 will now be 41% for all Central employees, constituting an increase of 6% over the existing 35%, I&B minister P R Dasmunsi said after the Cabinet meeting.

Thursday's decision comes amid the ongoing process of wage revision for the staff under the Sixth Pay Commission.

The 12-monthly average of the All India Consumer Price Index, on which the DA is calculated, works out to be 587.62 points during the period ended June 2007, up 91.82% over the base index of 306.33 points. Fifty per cent of DA had been merged with basic pay with effect from April 1, 2004.

The DA for government employees is linked to inflation and will prompt states to follow suit. Based on the recommendations of the Fifth Pay Commission, 50% of the DA has already been merged with basic pay with effect from April 1, 2004. DA to central government employees is revised twice a year from January 1 and July 1 -- payable with the salary for the months of March and September, respectively.