Finance Ministry freezes increment on dearness allowance, dearness relief for central govt employees, pensioners

The finance ministry on Thursday decided to put on hold increment in dearness allowance (DA) for 50 lakh central government employees and 61 lakh pensioners till July 2021 due to the COVID-19 crisis.

"Given 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 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.
 
According to sources, the combined savings on account of freezing of these instalments of DA and DR to central government employees and pensioners would be Rs 37,530 crore in the current financial year and 2021-22.
 
Generally, the states follow the Centre order on DA and DR.
 
It is estimated that the savings on the suspension of these instalments of DA and DR of state government employees and pensioners will be Rs 82,566 crore, the sources said.

Thus, the combined savings of the Centre and states will be Rs 1.20 lakh crore, which will help in fighting the battle against COVID-19 and its fallout.

The last DA hike for central government employees was effected last month effective January 1. 2020.

The Union Cabinet had approved a 4 per cent increase in DA for government employees and pensioners to 21 per cent.

With Thursday's decision, this 4 per cent hike has been put on hold.