The central government ministers are expected to meet on Monday evening to consider a proposal to hike the Dearness Allowance (DA) for the central government employees by 7 per cent.

The proposal, if approved by the cabinet, will benefit more than fifty lakh employees and thirty lakh pensioners in the country. The hike in dearness allowance might be effective from July 1, 2012 and the employees will be able to claim for arrears from that date.

According to estimates, the government will have to shell out about Rs. 5,000 crore for the eight-month period between July, 2012 and February, 2013 for meeting the hike in DA. The additional cost of the hike for the whole financial year will be about Rs. 7,400 crore.

The government has earlier increased the DA from 58 per cent to 65 per cent in March and it is effective from January 1, 2012. The new proposal seeks to increase the DA to 72 per cent as it is linked to consumer price index for industrial workers.

The cabinet is also expected to consider other proposals including computerization of the Public Distribution System (PDS) and a bailout package for state power distribution companies.