After Private Sector, Coronavirus Impacts Govt Employees; No DA Hikes Till July 2021

When almost every private sector company was laying off a majority of its employees, the government employees were resting at their homes without any tension. But due to coronavirus impacts the situation getting worse and worse, the economic heat has also reached to the government employees.

Last month, the central government did announce the disbursement of increased Dearness Allowance (DA) to a number of employees and pensioners. But, now with the increased financial burden because of coronavirus impacts all the money spending in disaster management, the central government has taken a U-turn on its DA hike announcement. The government has announced on Thursday that it is going to suspend all the DA hikes that it had previously announced in March.

The statement released by the government says that the hikes from January 1, 2020 (not April or May 1) would not be paid. The Dearness Allowance rates will remain the same from January 1, 2020, to June 30, 2021. Along with DA, the government would not pay any arrears (previous dues pending) either. The union cabinet met on Wednesday to discuss the effects that the COVID-19 has made on the Indian economy. It was the same cabinet that had decided in March that the government will give a hike of 4% in government employees and pensioners’ DA. Had the hike been applied, the DA would have been reached at a level of 21%.

(Source)

With a signature from additional secretary Annie George Matthew, the statement released by the finance ministry said that any remaining additional instalments of DA would also not be paid by the government.

This hike freeze will impact more than one crore potential beneficiaries. 49.26 lakh central government employees and 61.17 lakh pensioners were supposed to be benefited by the DA hike that has now been cancelled.

What is Dearness Allowance?

The Dearness Allowance or DA is a small amount of money that almost every country’s government pays to its employees and pensioners to compensate for the rising prices in the market. The DA is not counted in basic salary. Dearness Allowance is revised by the finance ministry after every two years.

This is the first time when government employees are directly affected by the pandemic. Earlier, it was MPs, Prime Minister, President, and ministers whose salaries were reduced by 30%.

According to the Ministry of Finance, this hike freeze will save Rs 37,530 crore for the central government. Government is losing the primary source of the revenue, i.e. taxes, while the pandemic is forcing it to drain all the money it has in its credit.

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