Prime Minister Narendra Modi will chair a meeting of the union cabinet on Wednesday to review India's response to the coronavirus pandemic. The cabinet may also clear a proposal to not increase the dearness allowance for government employees and pensioners, sources said.
Last month, the cabinet had hiked the dearness allowance or DA by 4 per cent from the existing 17 per cent to 21 per cent. This decision has now been kept on hold amid the coronavirus pandemic that has severely hit government revenue.
Sources said that the cabinet may decide to put the hike on hold for the entire calendar year. The government plans to increase the DA and may give arrears next year once the financial outlook improves.
The decision will impact over 54 lakh government employees and 65 lakh pensioners. The hike was set to cost the government an additional Rs 14,595 crore.
A component of salary and pension for government employees, DA is aimed to offset the cost of inflation.
The cabinet secretary has already written to all government secretaries and has urged them to get state-run companies under them and employees in their departments to contribute one day's salary to the PM CARES fund set up to tackle the coronavirus crisis and other emergencies in the future.
Amid the global COVID-19 pandemic, economic activity in India has been hit by one of the world's toughest lockdowns in which people have been forbidden from stepping out of their homes except for food and medicines until May 3.
The central government on Monday allowed some businesses and factories to open in rural India as part of a staggered exit from a weeks-long lockdown that has left crores out of work and short of food.
Even before the pandemic, India's $2.9 trillion economy was growing at its weakest pace in over a decade, but now it is expected to slow to even zero growth in the fiscal year that began on April 1, private economists say, putting further pressure on jobs.
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