The Centre froze three installments of Dearness Allowance/Dearness Relief for central government employees and pensioners during calendar years 2020 and 2021, citing financial difficulties in the wake of economic downturn on account of the COVID-19 pandemic. After the pandemic got over, employee unions and staff representative bodies continued to build pressure on the Centre to release the arrears of 18 months on account of frozen DA during the pandemic.
The issue has been raised in Parliament also several times, but the Modi government maintained that it cannot pay DA arrears to employees on account of economic unviability.
What led the govt to stop DA/DR hike during the pandemic
In March 2020, when the first wave of Covid-19 hit the country, the government deferred the decision to increase DA and DR of central employees and pensioners to reduce the pressure on the financial situation.
After this, the increase of DA-DR was stopped in three installments — January 2020, July 2020 and January 2021. This restriction lasted for a total of 18 months. At that time, the government had said that the expenditure on dealing with the pandemic and relief measures for the public has increased, so DA-DR hike cannot be given.
Employees’ expectations and government’s stance
As soon as the Covid situation improved, employees expected the government to release the withheld DA arrears of 18 months. Employee organisations also raised this demand many times. But whenever this question was asked in every Parliament session, the government gave the same answer – there is no plan to give arrears.
In the recent Lok Sabha session also, Minister of Finance in the Ministry of Finance Pankaj Chaudhary reiterated the same in response to the question of MP Anand Bhadoria. He said that this step was taken during the pandemic to reduce the financial burden and at present the government is not considering giving these arrears.
The minister also said that during the pandemic, the government’s fiscal deficit had reached 9.2% in FY 2020-21. However, now it has come down to 4.4% in the budget estimate for FY 2025-26. Despite this, the government said that the DA-DR installments stopped at that time will no longer be given.
What is the status of DA now?
Central employees and pensioners get DA-DR installment every 6 months. Currently DA is at 55% and it is expected to increase by 3% to 58% in the next revision period (July-December 2025). This revision is likely to come into effect around Diwali.
It is worth noting that this will be the last DA revision under the 7th Pay Commission, as the term of the commission ends on 31 December 2025. However, the announcement and formation of the 8th Pay Commission may be delayed by at least 18 to 24 months. In such a situation, employees and pensioners will continue to get DA installments in this interval as they are getting now.