Centre freezes Dearness Allowance of staff till July 2021

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The central government on Thursday decided to put on hold additional instalments of dearness allowance (DA) to central government employees due from January 1, 2020 till July 1, 2021 due to fiscal crunch caused by the coronavirus pandemic.

It also announced the freezing of dearness relief to pensioners from January 1. This means that additional DA and DR instalments due from January 1, 2020, July 1, 2020 and January 1, 2021 shall not be paid.

The order issued by the finance ministry said that arrears will also not be paid till July next year. However, the government will continue to pay DA and DR at current rates. The rate of DA and DR will be restored from July 1, 2021 with prospective effect.

The decision comes as the current situation has placed additional demands on the finances of the government. There is a need for major increase in expenditure on health as well as on welfare measures for various affected sections of society including the poor and vulnerable.

Holding back the four percentage point hike in DA for employees and dearness relief for pensioners could save the government an average of Rs 1,000 crore every month. The combined savings on account of freezing of three instalments of DA and DR to Central government employees and pensioners would be Rs 37,530 crore in the financial year 2020-21 and 2021-22, said a Times of India report.

Normally, the state governments follow the Central government orders on DA/DR and, therefore, it also helps the states to save Rs. 82566 crore. Thus, the total anticipated saving of Central and state governments will be Rs 1.20 lakh crore, which will help to fight the battle against COVID-19 and its fallout.

Image Credit: Indian Express

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