Centre Pauses Dearness Allowance Hike Till July 2021, Saves 37,000 Crores

A hike in Dearness Allowance and Dearness Relief for government employees and pensioners was stopped by the government today, in view of the country's financial situation amid the coronavirus pandemic. Dearness Allowance and Dearness Relief, however, will continue to be paid at the current rates. The freeze -- applicable from January -- will be on till June 2021, the government said. If the states follow the Centre's example, the combined savings will be 1.20 lakh crore, which will help in the battle against the coronavirus, the government said.

A component of salary and pension of government employees, Dearness Allowance and Dearness Relief are meant to balance the rising living costs due to inflation.

In a notification today, the government pointed to the additional demands on its finances. "There is a need for major increase in the expenditure on health as well as on welfare measures for various affected sections of the society including the poor and the vulnerable," the notice read.

"In this background, the government has decided to freeze the Dearness Allowance to Central Government employees and Dearness Relief to pensioners for the installments between 1st January 2020 and 1st July 2021. The rate of DA and DR will be restored from 1st July 2021 with prospective effect. The existing level of Dearness Allowance and Dearness Relief will continue to be paid to all employees/pensioners," the notice further read.

The government said the move will help save Rs 37,350 crore in the financial years 2020-2021 and 2021-2022. A similar move will save the states Rs 82,566 crore. The combined savings will amount to 1.20 lakh crore, the notifce read.

The government move -- finalized at yesterday's cabinet meet -- comes as the number of coronavirus cases in the country crossed 20,000. Figures from the health ministry this morning showed altogether, the 21,393 people tested positive for coronavirus, of whom 681 people died and 4,258 people recovered. Over the last 24 hours, 1,409 people tested positive for the virus.