Days after the Central government announced its decision to freeze the implementation of revised rates of Dearness Allowance (DA) of central government employees and Dearness Relief (DR) to pensioners for the installments due between 1st Jan 2020 and 1st July 2021, state governments have also started to follow the suit.
Citing the severe fiscal crisis due to the COVID-19 pandemic, the Tamil Nadu government recently said that it has decided to freeze additional installment of Dearness Allowance for its employees and pensioners till July 2021 and suspended earned leave encashment for a year.
Other than Tamil Nadu, the states of Maharashtra and Uttar Pradesh have also announced their decision to freeze the new rates. However, their decisions are not just limited to DA.
While the Centre released its Government Order (GO) on Thursday, the Uttar Pradesh Government on Saturday issued an order to suspend the fresh DA hikes given to the state employees, teachers and pensioners in view of the falling state revenue due to COVID-19 crisis.
As per the official order of the UP government, the DA allowance hike would be suspended between January 2020 and June 2021. This decision is expected to impact over 16lk Uttar Pradesh government employees and officers, around 3 lakh teachers, and 12 lakh, pensioners. However, DA would continue to be paid in UP at the rates set on July 1, 2019.
As per an Indian Express report, the UP government has also suspended six other allowances till March 31, 2021 apart from DA.
These include city compensatory allowance; secretariat allowance; special pay for police officials in the Crime Branch, CB-CID, Economic Offence wing, vigilance department, and special investigation branch; research allowance and design allowance for officers and employees of the Public Works Department (PWD); and I&P allowance paid to irrigation officers and employees.
Maharashtra govt has also reportedly gone ahead with a similar kind of move, but there is no official confirmation regarding it yet.
As per a report from the TOI, the Maharashtra government has decided to cut its employees DA and LTC to raise more than Rs 70,000 crore to fight coronavirus in the state.
Earlier in March 2020, the Union Cabinet had approved a 4% increase in Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners effective 1st Jan 2020. The increase was over the existing rate of 17 % of the basic pay/pension. The increase had been announced in accordance with the recommendations of the 7th Central Pay Commission.
Based on the increase in DA/DR announced on 13th March, the combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief was expected to be Rs.12,510.04 Cr. per year and Rs.14,595.04 crore in Financial Year 2020-21 (for a period of 14 months from January 2020 to February 2021). However, the ongoing unprecedented crisis arisen due to the coronavirus pandemic has started affecting the government’s accounts and the move to freeze the newly increased rates is an attempt to conserve cash for the long fight against the virus.
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