The Union Cabinet on Friday announced a 4% increase in dearness allowance for central government employees and pensioners. The government said this increase was over the 17% of the basic pay or pension.

The development will be effective from January 2020. The government said the increase will cost the exchequer an additional Rs 14,595 crore, according to PTI. The move will benefit about 48 lakh central government employees and 65 lakh pensioners, Union minister Prakash Javadekar said during a press briefing in New Delhi.

Dearness allowance is an adjustment given to employees to compensate for the increase in the cost of living because of inflation. It is revised twice a year, on January 1 and July 1.