Centre freezes hike in dearness allowance of central govt employees till July 2021 amid coronavirus COVID-19 crisis

The Centre on Thursday said that it has put on hold the increase in dearness allowance for its employees because of the strain on its finances due to coronavirus pandemic.

NEW DELHI: The Centre on Thursday said that it has put on hold the increment in dearness allowance for its employees till July 2021 because of the strain on its finances due to coronavirus COVID-19 pandemic.

The announcement is likely to impact nearly 50 lakh central government employees and 61 lakh pensioners.

"In view of the crisis arising out of COVID-19, it has been decided that additional instalment of dearness allowance payable to central government employees and dearness relief (DR) to central government pensioners due from January 1, 2020, shall not be paid,'' the Finance Ministry said in its order.

"The additional instalment of DA and DR due from July 1, 2020, and January 1, 2021, shall also not be paid," the Department of Expenditure said in an office memorandum.

However, DA and DR at current rates will continue to be paid, it added.

It may be noted that the Union Cabinet had approved an increase of 4% to DA in March to 21%. 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.

The government revises the dearness allowance twice a year to compensate for the rise in prices. The next revision is now scheduled in July.

This is possibly 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, their 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.