With requirement for resources to fight the COVID-19 pandemic increasing every day, the government on Thursday decided to freeze Dearness Allowances (DA) to Central Government employees and Dearness Relief (DR) to Central Government pensioners till July, 2021.
“In view of the crisis arising out of COVID-19, it has been decided that the annual instalment of Dearness Allowance payable to Central Government employees and Dearness Relief to Central Government pensioners, due from January 1, 2020 shall not be paid,” an office memorandum of Finance Ministry said. Further, the additional instalment of DA/DR due from July 1, 2020 and January 1, 2021 will also not be paid. However, DA/DR at current rates will continue to be paid.
This means, serving officers/employees and pensioners continue to get DA/DR at 17 per cent of basic pay or pension. DA/DR is calculated on the basis of change in rate of retail inflation for Industrial Workers. It is revised twice in a year – first from January 1 and second from July 1. As on date 48.34 lakh Central Government employees get DA and 65.26 lakh pensioners get DR.
It has been said that as and when the decision to release the future instalments of DA/DR due from July 1, 2021 is taken by the government, the rates of DA/DR as effective from January 1, 2020, July 1, 2020 and January 1, 2021 will be restored prospectively and will be subsumed in the cumulative revised rate effective from July 1, 2021. “No arrears for the period from January 1, 2020 till June 30, 2021 shall be paid,” the memorandum said.
According to sources, the combined saving on account of freezing of three instalments of DA and DR for Central government employees and pensioners would be ₹ 37,530 crore in current fiscal and next fiscal. Normally, the State governments follow the Central government orders on DA/DR. It is estimated that saving on freezing of three instalments of DA/DR of State Governments will be ₹82,566 crore. “Anticipated saving of ₹ 1.20 lakh crore will help in fight against COVID-19,” a source said.