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Amid the COVID-19 pandemic, the central government put a hold on three instalments of dearness allowance to reduce financial strain during the economic disruption.
MP Anand Bhadauria raised concerns regarding the pending DA payments. (Representative Image)
During the COVID-19 pandemic, the central government froze three instalments of Dearness Allowance (DA) and Dearness Relief (DR) for its employees and pensioners. This decision came as a result of severe economic disruption and the need to reduce pressure on government finances.
The move affected payments due from January 1, 2020, July 1, 2020, and January 1, 2021. The freeze prompted questions in Parliament regarding when the pending arrears would be cleared and the government’s fiscal health during and after the pandemic.
Member of Parliament Anand Bhadauria asked the government about the DA and DR arrears, seeking clarity on the reasons behind the freeze and the current status of payments.
In response, the government explained that the freeze was necessary due to the pandemic’s financial impact and the additional welfare measures undertaken to support citizens during that period.
What is Dearness Allowance?
Dearness Allowance (DA) is extra money given to government employees to help them keep up with rising prices. Dearness Relief (DR) is the same kind of support, but for pensioners, so inflation doesn’t reduce their spending power.
Government’s Response to the Freeze
When asked whether the freeze was due to economic disruption and to ease pressure on finances, the government stated: “The decision to freeze three instalments of Dearness Allowance (DA) / Dearness Relief (DR) to Central Government employees/pensioners due from January 1, 2020, July 1, 2020 & January 1, 2021 was taken in the context of COVID-19, which caused economic disruption, to ease pressure on government finances.”
On the question of the government’s fiscal condition, the government clarified: “The fiscal deficit of the government of India has narrowed from 9.2 per cent in the Financial Year (FY) 2020-21 to 4.4 per cent in the FY 2025-26 (Budget Estimates).”
Regarding when the arrears of 18 months’ DA/DR would be paid, the government explained that the economic impact of the pandemic, combined with additional welfare spending, left no room in the budget for these payments: “The adverse financial impact of pandemic in 2020 and the financing of welfare measures taken by the Government had a fiscal spill over beyond FY 2020-21. Therefore, arrears of DA/DR were not considered feasible.”
This clarification comes amid growing talk about the 8th Pay Commission, which got approval from the Union Cabinet in January this year but hasn’t been officially set up yet.
Once the commission is formed, it will meet with stakeholders and prepare a detailed report, usually taking over a year. The report will suggest changes to salaries and allowances for central government employees. Typically, when a new pay commission is implemented, the DA is reset to zero. At present, under the 7th Pay Commission, DA is 55 per cent of basic pay.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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Delhi, India, India
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