Bad news for Central government employees! Additional DA put on hold till July 2021

In what comes as a bad news for over 1 crore Central government employees, the Centre has decided not to pay the additional installment of dearness allowance (DA) payable to central Government employees and pensioners due from January 1, 2020 to July 2021. The employees will continue to get the DA at current rates. The decision will affect 50 lakh Central Government employees, 61 lakh pensioners along with Railway employees and pensioners.

“In view of the crisis arising out of Covid-19, it has been decided that the additional installment of dearness allowance payable to central government employees and dearness relief to central government pensioners due from 1st January 2020 shall not be paid,” said an office memorandum on the website of Finance Ministry’s Expenditure Department. 

Currently, the employees are paid 17 per cent DA/DR. However, last month, the cabinet had approved an increase to 21 per cent. The employees will continue to get the existing rates till July 1, 2021. After this, they will start receiving the new rates ‘prospectively’. This means that there will be no arrears paid for the difference between 21 per cent and 17 per cent that would have accumulated from January 1, 2020 to July 1, 2021.

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The steps have been taken in the wake of coronavirus crisis in the country with focus on spending on health and the various welfare measures for those most affected by the pandemic and the resultant nationwide lockdown. 

As per the estimates of the Finance Ministry, the DA freeze will help the Centre save around Rs 27,000 crore till March 2021.

"The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs .12, 510.04 crore per annum and Rs 14,595.04 crore in Financial Year 2020-21 (for a period of 14 months from January, 2020 to February 2021)," the government said.