Central government employees and pensioners have been eagerly awaiting news on whether the arrears for Dearness Allowance (DA) and Dearness Relief (DR), which were suspended for 18 months during the COVID-19 pandemic, will be released. Despite numerous representations from various employee unions, the government has made its stance clear on the matter.
Will Central Government Employees and Pensioners Get the 18-Month DA Arrears?
In response to growing inquiries, Union Minister of State (Finance) Pankaj Chaudhary addressed the question in Parliament. When asked whether the government is actively considering releasing the 18 months of DA/DR arrears that were withheld during the COVID outbreak, Chaudhary’s response was a firm “No.”
Chaudhary explained the rationale behind this decision, stating that the freeze on three installments of Dearness Allowance and Dearness Relief, which were due from January 1, 2020, July 1, 2020, and January 1, 2021, was implemented in the context of the economic disruption caused by COVID-19. The freeze was intended to ease pressure on government finances during a time of unprecedented economic strain.
“The adverse financial impact of the pandemic in 2020 and the financing of welfare measures taken by the Government had a fiscal spillover beyond FY 2020-21, making the arrears of DA/DR not feasible,” Chaudhary stated in his written reply.
Government’s Response to Union Representations
The minister also acknowledged that the government has received several representations from employee unions on the topic. In 2024 alone, various associations, including the National Council of Joint Consultative Machinery (NCJCM), have submitted requests urging the government to reconsider its stance on the DA arrears.
Earlier, in 2023, Chaudhary had informed the Lok Sabha that the government had saved Rs 34,402.32 crore by freezing the three installments of DA/DR. These funds were utilized to mitigate the economic impact of the COVID-19 pandemic.
Calls for the Release of DA Arrears
Employee unions have been vocal in their demands for the release of the DA arrears. The National Council (staff side) and the Bharatiya Pratiksha Mazdoor Sangh, among others, have urged the government to release the withheld arrears, arguing that it would provide much-needed relief to government employees and pensioners.
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In a letter addressed to Finance Minister Nirmala Sitharaman, Mukesh Singh, General Secretary of Bharatiya Pratiksha Mazdoor Sangh, emphasized the importance of releasing the DA arrears. “Releasing the seized DA arrears would contribute to the welfare of government employees and retirees. It would not only recognize their efforts but also provide much-needed relief to those who have diligently served our nation,” Singh wrote.
Understanding Dearness Allowance (DA)
Dearness Allowance is a key component of the salary for government employees and pensioners, designed to mitigate the effects of inflation. To ensure that government employees’ salaries keep pace with rising inflation, the Union government revises DA twice a year, in January and July.
The rate of DA varies depending on whether employees work in urban, semi-urban, or rural areas. As of January 1, 2024, the Dearness Allowance for central government employees was increased to 50%, which has also led to increases in other allowances, such as House Rent Allowance (HRA).
Will Basic Pay Increase as DA Touches 50%?
With DA and DR reaching the 50% threshold, there has been speculation that these allowances will be automatically merged into the basic pay, resulting in a pay increase for thousands of central government employees and pensioners. However, Sanjeev Kumar, Partner at Luthra and Luthra Law Offices India, clarified that this is not the case.
“DA does not automatically merge with the basic pay once it crosses the 50% threshold. The 7th Pay Commission Report did not recommend any such measure,” Kumar explained.
Despite the persistent demands from employee unions and the hopes of many central government employees and pensioners, the government has made it clear that it does not plan to release the 18-month DA/DR arrears. The decision, rooted in the financial challenges posed by the COVID-19 pandemic, highlights the government’s focus on maintaining fiscal stability. While the increase in DA to 50% is a welcome development, the merging of DA with basic pay remains off the table, according to current government policy.
