- The Ministry of Finance paused revision of dearness allowance for 18 months during Covid-19
- Arrears of DA/DR were not released due to fiscal impact of pandemic beyond FY 2020-21
- DA and DR payments were frozen for three instalments starting January 2020 to ease fiscal pressure
The Ministry of Finance on Monday responded to a query raised in the Parliament on the pause in revision of dearness allowance for government employees for 18 months during the Covid-19 pandemic.
The government was asked whether the arrears of the DA frozen during the period would be released, considering that the economy has recovered from the effects of the pandemic.
Replying to the question, Minister of State for Finance, Anand Bhadauria said, "The adverse financial impact of pandemic in 2020 and the financing of welfare measures taken by the Government had a fiscal spill over beyond FY 2020-21. Therefore, arrears of DA/DR were not considered feasible."
While DA is paid to government employees to offset the impact of inflation, dearness relief or DR is paid to the pensioners for the same reason.
"The decision to freeze three instalments of dearness allowance (DA) / dearness relief (DR) to Central Government employees / pensioners due from 01.01.2020 (Jan. 1, 202), 01.07.2020 (July 1, 2020) and 01.01.2021 (Jan. 1, 2021) was taken in the context of Covid-19, which caused economic disruption, so as to ease pressure on government finance," the MoS Finance added.
The question was raised in the Parliament amid the growing buzz over the 8th Pay Commission. While its formation received the Union Cabinet's nod in January, the panel is yet to be formally set up.
After it is officially setup, the commission will hold deliberations with various stakeholders before submitting its report to the government. The report includes its recommendations on fitment factor and other modalities for the revision of salaries and allowances. As per the historical precedent, the pay panels require at least more than a year to submit their reports.
Once the new pay commission comes effect, the DA component of the salaries is reset to zero. Presently, under the 7th Pay Commission, the DA stands at 55% of the basic wage.
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