Facing an economic slowdown caused by the nationwide lockdown due to Covid-19, the government has decided to not pay the additional installment of Dearness Allowance and Dearness Relief to central government employees and pensioners that was due to be paid from January 1 this year.
Through an office memorandum, the Finance Ministry further said that additional installments of DA and DR which are due from July 1 this year and January 1, 2021 will also not be paid.
“As and when the decision to release the future installment of Dearness Allowance and Dearness Relief due from July 1, 2021 is taken by the Government, the rates of Dearness Allowance and Dearness Relief as effective from 1st January, 2020, 1st July 2020 and 1st January, 2021 will be restored prospectively and will be subsumed in the cumulative revised rate effective from 1st July, 2021,” the Finance Minsitry said.
It added that “no arrears for the period from 1st January 2020 till 30th June 2021 shall be paid”.
The move is going to affect the income of over 48 lakh Central government employees and over 65 lakh pensioners.
While Dearness Allowance is paid to central government employees, Dearness Relief is paid to Central government pensioners to enable the recipients tide over inflation and other temporary financial situations.
Following the Centre’s move, the State governments are expected to follow suit and take a similar step.
The Centre hopes to save Rs 37,530 crores by putting a freeze on these payments while the State Governments are expected to save Rs 82, 566 crores through this move. In all, a total saving of Rs 1.2 lakh crores is being envisaged which then is expected to be used towards expenditure to improve the hospital infrastructure and enhance the government’s fight against Covid-19.