During the COVID-19 pandemic, the central government of India suspended Dearness Allowance (DA) and Dearness Relief (DR) payments for 18 months, from January 2020 to June 2021. This decision affected millions of central government employees and pensioners, who have since been advocating for the release of these arrears.
Government’s Stance on DA Arrears
Recently, Union Minister of State for Finance, Pankaj Chaudhary, responded to inquiries in Parliament regarding the release of these arrears. He clearly stated that the government is not actively considering releasing the 18 months of DA/DR arrears for central government employees and pensioners.
Rationale Behind the Decision
The minister explained that the decision to freeze DA/DR installments was taken in the context of the economic disruption caused by COVID-19. The aim was to ease pressure on government finances. Chaudhary further elaborated that the adverse financial impact of the pandemic and the cost of welfare measures extended beyond the 2020-21 fiscal year, making the payment of arrears unfeasible.
Financial Impact of DA Suspension
In 2023, Chaudhary had informed the Lok Sabha that the government had saved approximately Rs 34,402.32 crore due to the freezing of these three DA/DR installments. This amount was utilized to address the economic challenges posed by the COVID-19 pandemic.
Ongoing Representations from Employee Unions
Despite the government’s stance, various employee unions continue to advocate for the release of these arrears. The minister acknowledged that the government has received representations from government employees’ associations, including the National Council of Joint Consultative Machinery (NCJCM), during 2024.
Understanding Dearness Allowance
Dearness Allowance is a crucial component of government employees’ and pensioners’ salaries, designed to offset the impact of inflation. The Union government revises DA twice a year, in January and July. The DA rate varies based on whether employees work in urban, semi-urban, or rural areas.
Recent DA Increase and Its Impact
As of January 1, 2024, the DA for central government employees was increased to 50%. This increase has led to a rise in several other allowances, including the House Rent Allowance (HRA).
Clarification on DA Merger with Basic Pay
There have been speculations that once DA reaches 50%, it would automatically merge with the basic pay. However, Sanjeev Kumar, a Partner at Luthra and Luthra Law Offices India, clarified that this is not the case. The 7th Pay Commission Report did not recommend any such automatic merger.
In conclusion, while central government employees and pensioners continue to hope for the release of DA arrears, the government maintains its position that such a move is not currently under consideration due to the lingering economic effects of the COVID-19 pandemic.
