In the wake of the coronavirus crisis, the Narendra Modi government on Thursday, April 23, decided to freeze payment of additional installment of dearness allowance (DA) for all its Central government employees and dearness relief (DR) to pensioners falling due from January 1, 2020.
The decision, which will affect around 50 lakh central government employees and 61 lakh pensioners, comes after the Union Cabinet on March 14 approved a four per cent hike in DA to 21 per cent in a bonanza for 1.13 crore employees and pensioners applicable from January, 2020 costing the exchequer Rs 14,595 crore.
The Finance Ministry said in its order that additional installment of DA and DR falling due from July 1, 2020 and January 1, 2021 will also not be paid. However, the allowance will continue to be paid at current rates.
In an office memorandum, the Finance Ministry said, "In view of the crisis arising out of Covid-19, it has been decided that additional installment of dearness allowance payable to central government employees and dearness relief (DR) to central government pensioners due from January 1, 2020, shall not be paid."
"The additional installment of DA and DR due from July 1, 2020, and January 1, 2021, shall also not be paid," the Department of Expenditure said in its order.
The Central government employees will also not get any arrears in any future revision of DA/DR from July 1, 2021. However, If a decision to revise DA rates is taken for July 1, 2021 period, the rate of allowance as effective from January 1, 2020, July 1, 2020 and January 1, 2021 will be restored prospectively and will be subsumed in the cumulative revised rates effective from July 1, 2021, the office memorandum said.
Though the government did not give an estimate of how much it would save by disallowing DA revision for its employees, a four per cent raise approved by cabinet last month meant additional expenditure of around Rs 15,000 crore. For three half yearly periods, going by this yardstick, would result in savings of close to Rs 45,000 for the Centre.
Any change in DA rates benefits about 48 lakh Central government employees and 65 lakh pensioners.
DA is paid by the government to its employees as well as pensioners to offset the impact of inflation.
(With agency inputs)