India Rolls Back Hike In Dearness Allowance For Central Government Employees
Employees, pensioners will get dearness allowance & dearness relief at current rate of 17% of basic pay or pension till June 2021.
India rolled back a hike in special allowances to central government employees and pensioners amid the crisis stemming from the new coronavirus pandemic, a move that may help it to save about Rs 21,000 crore.
The 1.14-crore employees and pensioners will continue to get dearness allowance—offered to compensate for the rise in inflation and cost of living—and dearness relief at the current rate of 17 percent of basic pay or pension till June-end 2021, according to a government office memorandum. Earlier, it had announced a hike in allowances to 21 percent, effective January 2020.
In March, the Union cabinet—chaired by Prime Minister Narendra Modi—approved a 4 percent increase over the existing rate of 17 percent of the basic pay and pension to 48.34 lakh central government employees and 65.26 lakh pensioners. This was expected to cost Rs 14,595 crore to the government in 2020-21, as it would include payments from January 2020 to February 2021, and Rs 12,510 crore subsequently every year, according to its prior statement.
But the government reversed its decision as economic activity stalled amid the world’s biggest lockdown to curb spreading of infection. The government has already imposed caps on spending by some ministries and departments. It even cleared an ordinance to cut salaries of all ministers and members of Parliament by 30 percent for a year, and temporarily suspended allocation to the Members of Parliament Local Area Development Scheme.
The latest move will give a partial relief to the government to make pandemic-related expenditure as well as support vulnerable sections of the society, NR Bhanumurthy, professor at National Institute of Public Finance and Policy, said. “This will not put much burden on the salaried class,” he said, adding it was better than announcing a salary cut for employees that some state governments have done.
The government, however, will declare a higher hike in allowances in July 2021 and factor in the past inflation, Bhanumurthy said.