New Delhi: The central government on Thursday suspended disbursement of increased dearness allowance (DA) to its employees and pensioners announced last month and decided to freeze the next two hikes as well because of the strain on its finances due to the coronavirus pandemic.
As a result of the freeze, the government will not pay the hike in dearness allowance that was due from January 1, 2020, and the rates will remain the same till July next year, a notification issued by the government said. The government also said no arrears for the period from January 1, 2020, to June 30, 2021, will be paid.
The decision was taken at a meeting of the union cabinet on Wednesday. The union cabinet had approved an increase of 4 per cent to DA in March with effect from January 2020 for a total of 21 per cent.
The finance ministry said additional instalments of dearness allowance and dearness relief due from July 1, 2020, and January 1, 2021, will also not be paid. “Dearness allowance and dearness relief will continued to be paid at current rates,” the note, signed by additional secretary Annie George Matthew, stated.
The decision will impact about 49.26 lakh central government employees and 61.17 lakh pensioners. A component of salary and pension for government employees, dearness allowance is meant to offset the cost of inflation. The government revises it twice a year.
As per the estimate of the finance ministry, the freeze will help the government save around Rs 37,530 crore.
The government’s tax revenues have plummeted because of the coronavirus lockdown while expenses have shot up because of the support provided to the vulnerable groups.
The next revision, the government said, will not be in July 2021 and the rates due from January 2020, July 2020, and January 2021 will be subsumed cumulatively in the revised rate.
This is the first coronavirus impact on central government employees. The government had earlier cut salaries of ministers, PM, president and members of parliament by 30%. In addition, there MPLADs scheme has also been suspended for two years to provide more funds to fight the coronavirus pandemic.