The Union Cabinet on Thursday approved the proposal to increase dearness allowance (DA) to 80 per cent from the existing 72 per cent. The move will benefit 50 lakh Central government employees and 30 lakh pensioners. The hike would be effective from January 1, 2013 and the employees and pensioners would be entitled to arrears. DA is merged with basic pay when it breaches the 50 per cent cap. This helps employees get higher allowances as these are paid as a proportion of the basic pay.