​Govt likely to de-freeze and hike dearness allowance to 28%

Unconfirmed report - Based on News Portals. Reader discretion advised

Update: Cabinet Secretary indicates DA freezing may continue even after June

There are unconfirmed reports that the government has reportedly decided to increase the Dearness Allowance (DA) by 4 per cent and Dearness Relief (DR), according to the current rate of inflation of 28 per cent. However, no official announcement has been made yet by the central government on this matter. If this comes true, then it will benefit around 50 lakh employees and 61 lakh, pensioners.

With the hike of 4 per cent in the DA of central government employees, the allowance will come to 21 per cent from 17 per cent. As per the reports, the benefit of the dearness allowance will start coming from the month of January 2021.

It is also believed the move to de-freeze the Dearness Allowance will ultimately result in increased economic activity. An increase in DA provides additional money in the hands of government employees. If this additional money is spent, it will have a positive impact on the sagging consumption demand, which the biggest problem in the economy right now.v Putting money into the hands of the government employees is one of the option for the government to boos consumption. It has done the same via the LTC cash voucher scheme.

The Association of Employees Confederation of Central Government Employees and Workers have earlier urged Union Finance Minister Nirmala Sitharaman to release the DA of all government employees and pensioners as per the current inflation rate of 28 per cent. Information regarding the current status of the government treasury was also provided to the finance minister.

(Read: Confederation demands restoration of Dearness Allowance at the current rate)

In April 2020, due to the Covid-19 pandemic, the Finance Ministry had decided to freeze the DA for 50 lakh central government employees and dearness relief for 61 lakh pensioners till July 2021.

In an official memorandum, the Department of Expenditure had then said that due to the coronavirus crisis additional instalment of DA payable to central government employees and DR to pensioners due from January 1, 2020, will not be paid.

The Centre further said that additional instalment of DA and DR due from July 1, 2020, and January 1, 2021, will also not be paid. However, as per the memo, DA and DR at current rates will continue to be paid.

The dearness allowance or DA is paid to help the central government employees to cope up with the expenses, keeping inflation rate in mind. DA is announced in two instalments in a year, from January to June and then from July to December.

Sources : 

News18.com

DNA.com