A decision has been taken by the central government which is going to impact 4.8 million salary holders and 7.5 million pensioners. The government has put on hold the increased 4% in DA till 1 July 2021. Last month the central government approved to increase DA to 21 % from January 2020. But looking at the current economic situation government has deferred it till July 2021, till then the existing 17% will be given. NO arrears will be paid for the amount accumulated between January 2020 to July 2021 due to the difference in 17% and 21%.

What is Dearness Allowance or Dearness Relief?

Dearness Allowance is the amount paid by Central Government to all government employees to compensate for the increasing inflation. On the other hand, the Dearness Relief is the amount paid to Government Pensioners.

Impact of Corona Pandemic on Indian Economy

This decision has been taken after considering the impact of Covid 19 on the economy. The economy is in complete lockdown for the last 29 days. Apart from some sectors which are involved in producing and distributing basic commodities, most of the sectors are on standstill. People are losing their jobs either in an organized or unorganized sector. Even if the lockdown will get ease after 3 may, factories will face labor shortage as most of the migrant workers are now return to their home and may feel insecure in returning. Major rating agencies like world bank, IMF predicts that the Indian economy will grow just above zero in the financial year 2020-2021 and apart from China and India, all other major economies will face contraction.

The government is trying to save some money through this decision which they want to channelize toward upgrading health facilities and running different welfare schemes. The Finance Ministry estimated that through this decision they can save up to Rs 270000 crore. Currently, the ramification of this virus is under control and the government is trying every bit to stop it from going into the community transmission phase. Currently, there are 21,700 confirmed cases, 686 deaths, 4325 cured cases of corona in India.
while this decision will disappoint central government employees and pensioners but will provide the government some financial room to the government to upgrade health facilities and provides some relief to the poor.