Centre Suspends DA Hikes till July 2021 with No Arrears after Announcing it in March

On Thursday, 24 April, 2020, the Central Government announced the suspension of disbursement of the increased Dearness Allowance (DA) to its employees as well as the pensioners which were announced last month. Not just this but also the decision to freeze the next tow hikes was also taken because of the sheer strain which has been put on the finance by the COVID-19 pandemic.

As an aftermath of the freeze, the government will not be paying the hike in DA which was due since 1^st January 2020 and the DA rates will remain the same until July 2021 according to a notification issued by the government. The government also said that no arrears will be paid for the period from 1^st January 2020 until 20^th June 2021.

This decision of suspending the hike of DA was taken at the Union Cabinet meeting held on Wednesday. The Union Cabinet meeting approved an increase in DA of 4% which were have come in effect from January 2020 for a total of 21% and had also said that when it was to be disbursed, employees and pensioners were to get the arrears since January 2020.

The Ministry of Finance said that additional installments of DA and Dearness Relied which will be due from July 1 of 2020 until January 1 of 2021 will not be paid either. “Dearness allowance and dearness relief will be continued to be paid at current rates,” the note, signed by Additional Secretary of Department of Expenditure Annie George Matthew, stated.

This decision of stopping the hike and disbursement of the hiked DA will impact more than 49 lakh employees of the Central Government as well as over 6 lakh pensioners. The component of the salary and also the pension for the Government Employees, DA is meant to offset the impact of inflation which the government revises twice a year.

As per the estimates from the Ministry of Finance, this decision of freezing the DA will save the government close to Rs. 27,000 crore till March 2021.

The tax revenues of government have depleted because of the COVID-19 as the expenses have skyrocketed to support the authorities, medical professionals and the underprivileged class of the economy.

The government has said that the next revision in DA will not be done before July 2021 and the rates due from the 1^st January 2020, July 2020 and July 2021 will be subsumed cumulatively in the next revision.

This is the first monetary impact of the COVID-19 on Central Government employees, earlier, the government did cut salaries of Ministers, PM, MPs, and even the President of India by 30%.

In addition, even the Members of Parliament Local Area Development Scheme (MPLADS) has also been suspended for a period of 2 years to provide cash flow to the government to fight against the pandemic.