Centre restores, raises D.A. for its employees
NEW DELHI: The Union Cabinet on Wednesday increased the dearness allowance (DA) and dearness relief (DR) for 11.4 million central government employees and pensioners to 28% of basic pay from 17% effective prospectively from July 1.
However, three instalments of DA and DR held back from last year will not be paid at the new rate, despite a demand by central government staff.
The three additional instalments of DA to central government employees and DR to pensioners, which were due from January 1 , 2020, till June 2021, were frozen in April, just a month after the Cabinet approved a hike to 21% of basic pay from 17%.
The government said this was because the pandemic had put central government finances under stress.
On Wednesday, it said the decision to defer the three instalments for a period of 18 months saved the Centre ₹37,530 crore and helped it create fiscal space to build a ₹1.2 trillion war chest to combat the coronavirus pandemic and for the stimulus spending needed to revive a stalled economy.
State governments also saved an additional ₹82,566 crore by freezing the payments, according to the Union government’s estimate, freeing up the funds to fight the outbreak.
Union information and broadcasting minister Anurag Thakur, briefing reporters on Wednesday, said DA and DR from January 1, 2020, to June 31, 2021, shall remain 17%, signalling that no arrears will be paid for the 18-month period. Thakur said the DA hike will cost the exchequer ₹34,400 crore annually.
“The DA/DR hike amount is substantial and will give a boost to consumption even if 20% is saved. Fiscal deficit will increase marginally, maximum 0.1% of GDP,” said Madan Sabnavis, chief economist at Care Ratings.
Several employees’ unions, including central secretariat workers, teachers and corporation workers, wrote to Prime Minister Narendra Modi earlier this month, seeking restoration of DA and DR.
They said given the high food and fuel prices, their dues should be settled.
Separately, the cabinet also approved the continuation of Rebate of State and Central Taxes and Levies (RoSCTL) with the same rates as notified by the textiles ministry on exports of apparel/garments and made-ups by excluding such items from the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, which is still under work. The scheme will continue till March 31, 2024.