Coronavirus lockdown: Centre freezes dearness allowance of central government employees till June 2021

About 50 lakh Central government employees and 61 lakh pensioners will have to wait till July next year for any hike in their dearness allowance and dearness relief as the government, scrambling for resources to fight Covid-19, Thursday decided to freeze any increase in DA and DR till June 30, 2021.

The recent hike of 4% in DA and DR of the central government employees due since January this year also stands withdrawn.

Last month, the Union Cabinet had approved a 4% hike in DA and DR to 21%. This was to be paid retrospectively from January.

No arrears will be paid once the increase in DA and DR is restored in July 2021, a government order said. The employees and pensioners will, however, continue to receive DA at the current rate of 17% as part of their salary/pension.

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This move will impact about 49.26 lakh central government employees and 61.17 lakh pensioners but save about Rs 38,000 crore to the Central exchequer after three instalments of DA and DR gets cancelled. The state governments too are expected to follow suit. The estimated savings from the freeze of DA and DR of state government employees is likely to be Rs 82,500 crore.

The dearness allowance is revised in January and July every year to compensate for rising prices.“In view of Covid-19 crisis, it has been decided that additional instalment of dearness allowance payable to central government employees and dearness relief to central government pensioners due from January 2020, shall not be paid.“The additional DA and DR due from July 1, 2020, and January 1, 2021, shall also not be paid.

However, DA and DR at current rates shall continue to be paid,” the order said. This comes on the back of the government already effecting a cut in salaries of ministers, the prime minister, president and members of parliament by 30%.