“In view of the crisis arising out of Covid-19, it has been decided that the additional instalment of dearness allowance payable to central government employees & dearness relief to central government pensioners, due from January 1, 2020 shall not be paid,” the finance ministry said in a statement.
The decision comes as the current situation has placed additional demands on the finances of the government. There is a need for major increase in expenditure on health as well as on welfare measures for various affected sections of society including the poor and vulnerable.
This means that additional DA and DR instalments due from January 1, 2020, July 1, 2020 and January 1, 2021 shall not be paid.
However, the government will continue to pay DA and DR at current rates. The rate of DA and DR will be restored from July 1, 2021 with prospective effect.
Further, no arrears will be paid for the period from January 2020 till June 30, 2021.
The combined savings on account of freezing of three instalments of DA and DR to Central government employees and pensioners would be Rs 37,530 crore in the financial year 2020-21 and 2021-22.
Normally, the state governments follow the Central government orders on DA/DR. It is estimated that the saving on freezing of three instalments of DA and DR of state governments employees and pensioners, will be Rs.82566 crore.
Thus, the total anticipated saving of Central government and state governments will be Rs 1.20 lakh crore, which will help to fight the battle against COVID-19 and its fallout.
Last month, the Union cabinet had approved a 4 per cent increase in DA for government employees and pensioners to 21 per cent. However, this 4 per cent hike has now been put on hold.