The Ministry of Finance on Thursday decided to not roll out the dearness allowance hike payable to government employees due to the financial fallout of the coronavirus pandemic. Additional instalment of dearness allowance (DA) payable to central government employees and dearness relief (DR) to central government pensioners due from January 1, 2020 shall not be paid, said the ministry in a notification. It also said that additional instalments of DA and DR from July 1, 2020 and January 1, 2021 shall also not be paid.
The ministry, however, clarified that employees would continue to receive DA and DR at the current rates. The freezing of instalments would help in saving Rs 37,500 crore for the next two years including 2020-21 and 2021-22, said the ministry in a notification.
Finance Ministry officials said the state government usually follows the centre in this aspect. If states also follow then they would save around Rs 82,000 crore. The combined savings for the central and state governments would be over Rs 1.20 lakh crore in two years.
The ministry had in March announced a 4 per cent increase in dearness allowance, fulfilling a long-standing demand of the employees. Union Minister Prakash Javadekar had said that the Cabinet had approved an increase of 4 per cent DA and DR over the existing rate of 17 per cent of basic pay/pension. "Dearness Allowance and Dearness Relief are granted to serving employees and pensioners of the Central Government respectively each year with effect from 1st January and 1st July and normally paid in March and September, respectively," he had stated.
The move to put the DA hike on hold for now has come amid reducing government revenue and increasing spending amid the coronavirus pandemic. This decision would impact around 49.26 lakh central government employees and 61.17 lakh pensioners. The next revision was scheduled for July.
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