The finance ministry today announced that it has put on hold a hike in dearness allowance (DA) for central government employees and dearness relief (DR) for central government pensioners.
“Additional installment of Dearness Allowance (DA) payable to central govt employees & Dearness Relief (DR) to central govt pensioners, due from 1st Jan, 2020 shall not be paid. Additional installments of DA & DR from 1 July 2020 & 1 Jan 2021 shall also not be paid,” the Ministry of Finance said.
However, dearness allowance and dearness relief at current rates will continue to be paid, it said.
The Union Cabinet had last month hiked the DA and DR by 4%, from 17% of basic pay/pension to 21% of basic pay/pension for central government employees and pensioners.
The government’s tax revenues have plummeted because of the Covid-19 lockdown while expenses have shot up because of the support provided to the vulnerable groups.
There are at least 50 lakh government employees and 65 lakh pensioners. The DA hike would have cost the exchequer ₹14,500 crore.
The government revises dearness allowance twice a year to compensate for the rise in prices. Next revision is now scheduled in July.
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. The total savings on the scheme would be about RS 8,000 crore.
Several states across the country have already reduced salaries of their employees.
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