The finance ministry on Thursday (April 23) decided to put on hold the increment in dearness allowance (DA) for 50 lakh central government employees and 61 lakh pensioners till July 2021 to save funds for the COVID-19 crisis.
“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 instalment of DA and DR due from July 1, 2020, and January 1, 2021, shall also not be paid,” the Department of Expenditure said in an office memorandum.
The order signed by Additional Secretary Annie George Mathew also mentioned that arrears due will not be paid till July next year.
However, DA and DR at current rates will continue to be paid.
According to sources, the combined savings on account of freezing of these installments of DA and DR to central government employees and pensioners would be ₹37,530 crore in 2020-21 and 2021-22.
It is estimated that the savings on suspension of these installments of DA and DR of government employees and pensioners will be ₹82,566 crore, the sources said.
Thus, the combined savings of the Centre and states will be ₹1.20 lakh crore, which will help in fighting the battle against COVID-19 and its fallout, they added.
The last DA hike for central government employees was effected last month from January 1, 2020. The Union Cabinet had approved a 4 per cent increase in DA for government employees and pensioners from 17% to 21%.
With Thursday’s decision, the 4% hike has been put on hold.
(With inputs from agencies)