The Finance Ministry on Thursday issued an order freezing the Dearness Allowance (DA) to the Central government employees and Dearness Relief (DR) to Central government pensioners at current rates till July 2021.
“The undersigned is directed to say that in view of the crisis arising out of COVID-19, it has been decided that the additional instalment of Dearness Allowance payable to Central government employees and Dearness Relief to Central government pensioners, due from January 1, 2020, shall not be paid,” said the order.
“The additional instalments of Dearness Allowance and Dearness Relief due from July 1, 2020, and January 1, 2021, shall also not be paid. However, Dearness Allowance and Dearness Relief at current rates will continue to be paid,” it said.
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As and when the decision to release the future instalment of DA and DR due from July 1, 2021, is taken by the government, the rates of DA and DR as effective from January 1, 2020, July 1, 2020 and January 1, 2021, will be restored prospectively.
They will be subsumed in the cumulative revised rate effective from July 1, 2021. However, no arrears for the period from January 1, 2020, till June 30, 2021, will be paid, according to the Department of Expenditure's order.
The combined savings on account of freezing of three instalments of Dearness Allowance and Dearness Relief will be ₹37,530 crore in 2020-21 and 2021-22, according to a government official.
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The decision has been taken considering that there is a need for major increase in the expenditure on health as well as on welfare measures for various affected sections of society, including the poor and vulnerable.
The State governments usually follow the Central government orders on Dearness Allowance and Dearness Relief.
The Centre estimates that the saving on freezing of three instalments of State governments' employees and pensioners will be ₹82,566 crore.