business

Updated: Apr 23, 2020 14:47 IST

The Centre on Thursday announced that additional dearness allowance (DA) due to the central government employees from January 1, 2020, will not be paid due to the Covid-19 crisis. It also announced the freezing of dearness relief to pensioners from January 1.

The order signed by Additional Secretary Annie George Mathew also said that arrears will also not be paid till July next year. Dearness allowance and dearness relief at current rates will continue to be paid, said the order.

The government was discussing the proposal to defer payment of dearness allowance for some time and utilise the money to fund the fight against Covid-19, Hindustan Times had earlier reported, citing two people familiar with the development.

The Union Cabinet had last month decided to raise the DA by four percentage points, from the existing 17 per cent to 21 per cent of the basic pay or pension of employees to compensate for price rise.

But formal orders for raising the DA were never issued after Prime Minister Narendra Modi ordered the national lockdown within a fortnight of the cabinet decision.

Holding back the four percentage point hike in DA for employees and dearness relief for pensioners could save the government an average of Rs 1,000 crore every month. The move was estimated to cost the exchequer Rs 14,595 crore over a 14-month period.

The political leadership has already taken a 30 per cent pay cut to give a message to conserve funds.

Prime Minister Narendra Modi and his cabinet colleagues had recently gone for a 30 per cent pay cut for all ministers and all Members of Parliament (MPs) also. President Ram Nath Kovind and Vice President M Venkaiah Naidu had opted for the pay cuts soon after.

The government has already announced a Rs 1.7 lakh crore welfare package on March 26 to provide immediate relief to the poor because of the lockdown. While the government will continue to provide all required help to farmers, daily wagers, and micro and small industries, it will also take some regulatory and fiscal measures to boost the economy and that would require huge funds, the two officials mentioned above said.

According to industry estimates, a total Rs 16 lakh crore economic stimulus package, inclusive of Rs 1.7 lakh crore already announced, is needed to boost the economy so that millions of jobs and livelihoods are protected.