The government has plans to increase employees' dearness allowance (DA) by 10 per cent this year, according to an official sources.

Sources familiar with the central government's plans said that the government was considering announcing a 10 per cent hike in DA from current 80 per cent to 90 per cent.

The probable increase in DA would directly benefit nearly 80 lakh people - around 50 lakh central government employees and around 30 lakh pensioners.

The sources added that the precise amount of DA worked out to more than 90 per cent after factoring in the modified all India CPI-IW (Consumer Price Index for Industrial Workers) for the month of June.

As per revised official data, rate of retail inflation for factory workers for the month of June stood at 11.63 per cent, as against provisional estimate of 11.06 per cent.

In case the sources are true, it would be a double digit increase in DA after three years.  Earlier, the double digit hike in DA was announced in September 2010.

The increase is expected to be scheduled to take effect from 1st of July this year.