The government has decided to pay the second instalment of the Sixth Pay Commission arrears.
"As in the case of the first instalment of the arrears, government servants would be permitted to deposit their arrears in their GPF (general provident fund) accounts," an internal finance ministry memorandum said.
The first instalment of 40 percent was paid last fiscal.
The finance ministry has not given any deadline for the payment of the second tranche, but sources said it would probably be paid around Diwali.
According to official estimates, the arrears will cost the government Rs.29,373 crore.
There are about 3.8 million central government pensioners (excluding armed forces) as estimated by the All India Central Government Pensioners Association (AICGPA).
The revised pension scheme was implemented with retrospective effect from Jan 1, 2006.