The Punjab government on Friday decided to restore the old pension scheme for its employees, with Chief Minister Bhagwant Mann terming it a Diwali gift for the state staff.

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"We have taken an in-principle decision to this effect in a cabinet meeting. This will benefit lakhs of employees," he said while adding that modalities will be worked out.

Mann said the approval for six per cent dearness allowance for government employees has also been given by the state cabinet.

The restoration of the old pension scheme, which was discontinued in 2004, has been one of the major demands of state government employees.

The state government's decision has come ahead of the Himachal Pradesh and Gujarat Assembly polls, where AAP is trying its luck and had promised to restore the old pension scheme for state government employees if voted to power.

Mann said the employee's demand has been met now and it's a Diwali gift for them.

"Arvind Kejriwal has told that we say (promise) we have to deliver and not say something what we cannot deliver," said Mann.

"The promises we are making, we are fulfilling," he added.

Finance Minister Harpal Singh Cheema said employees will be given the option to join the old pension scheme.

State's Housing and Urban Development Minister said "historic decisions" have been taken by the government for benefit of its employees.