Hike in dearness allowance by 3 pc

New Delhi: Government employees' pay packets will get fatter, with the Cabinet on Thursday approving three per cent hike in dearness allowance (DA). The decision will be effective from January 2006.

Commerce Minister Kamal Nath confirmed the hike in DA after the Cabinet meeting, which was chaired by Prime Minister Manmohan Singh.

The Cabinet also cleared the proposal to allow split of stocks of State Bank of India by amending the SBI (Subsidiary Bank) law, Nath said.

The stock split would enable greater participation of retail investors.

The hike in DA to 24 per cent will cost the Government an additional Rs 1,130 crore per annum.

The burden for January-February 2006-07 on account of the DA increase will be Rs 1,320 crore.