New Delhi, Aug 29 (IANS): The Union cabinet on Wednesday approved the release of an additional two per cent dearness allowance (DA) for 48 lakh central government employees and 62 lakh pensioners with retrospective effect from July.

The hike of two per cent raises the existing DA of seven per cent to nine per cent. The Cabinet had raised the DA from five to seven per cent last March. The increments have been as per the recommendations of the seventh Central Pay Commission.

"The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 6,112.20 crore per annum and Rs 4,074.80 crore in the financial year 2018-19," the Finance Ministry said in a statement.

The period under consideration for financial year 2018-19 is the eight months from July 2018 to February 2019.

"This will benefit about 48.41 lakh Central government employees and 62.03 lakh pensioners," the statement said.

Dearness allowance, paid to government employees and pensioners, is a cost of living adjustment allowance to mitigate the impact of inflation on people.