Govt Stops Dearness Allowance Hike Of 49 Lakh Govt Employees; 60 Lakh Pensioners: Find out Why?

As per the reports, the Government has decided to put on hold the increase in dearness allowance (DA) for the Central Government employees in a bid to contain the strain on its finances amid the COVID-19 induced crisis.

Why Would This Happen?

Because of lockdown, the tax revenues down to a trickle. 

In view of this, the Centre seems to have decided to delay the implementation of its recent decision of raising dearness allowance (DA) for 1.13 crore government employees and pensioners. 

Further, the development comes less than a month after the union cabinet had approved a hike in DA from 4 percent to a much higher 21 percent.

As, the Cabinet had given its approval to increase the DA by 4% to 21%, on March 13, which would have cost the exchequer an additional Rs 14,510 crore in FY21.

How Would This Affect?

Basically, this decision will affect 49.26 lakh central government employees, along with the over 61.17 lakh pensioners.

Further, the union cabinet will be taking up a proposal to put a hold on any further increase in DA for the ongoing year on 22 April. 

Moreover, this gains significance as the government revises DA twice every year to compensate for the rise in prices. 

Also, the next such revision is due in July.

What About Other Initiatives?

Apart from this earlier, the government had also announced a paring down of the salaries of Ministers, Prime Minister (PM), President, and the members of Parliament by 30 percent. 

Additionally, the government had also suspended the PMLADS scheme for a span of two years.

Further, the changes in DA are to come into effect retrospectively from January 1, 2020. 

Also, the April salary, which is due to be paid in a week’s time, was supposed to be based on revised DA, along with arrears for three months (January-March). 

Although, the finance ministry is yet to notify the changes in DA announced on March 13. 

According to the official, in normal circumstances, it would have been notified by now.

As the government facing revenue crunch due to virtual stalling of business activities since March 24, when the lockdown began, the government has recently announced cost-cutting measures, including slashing the Budget allocation of most departments by up to 40%. 

Apart from that, the government has also appealed to its staff to voluntarily donate one day’s pay in April to the PM-CARES fund.