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Government freezes DA & DR for 1.1 crore employees & pensioners: COVID-19

On April 23, 2020 The Department of Expenditure, under the finance ministry has stated that the central government has frozen the Dearness Allowance (DA) & Dearness Relief (DR), an inflation-linked allowance to its 1.1 crore employees & pensioners respectively due from January 1, 2020 to combat the COVID-19 pandemic outbreak.Govt freezes DA, DR for 1

  • The government had announced a 4% increase in DA for its 50 lakh employees and 61 lakh pensioners to 21% effective from January 1, 2020, which was to cost Rs 27,100 crore in the current financial year 2020-21.
  • It is estimated that the central government will be able to save Rs 37, 530 crore in the current financial year & 2021-22. The states will likely implement the central government order on DA and DR & they will save Rs 82, 566 crore, which totally save  Rs 1.20 lakh crore.

Other Changes

i.The additional instalment of DA and DR due from July 1, 2020, and January 1, 2021, will not be paid.

ii.The employees and pensioners will continue to receive DA and DR, respectively, at the current rate of 17% till June 30, 2021.

iii.No arrears will be paid from January 1, 2020, to June 30, 2021 but, the government to release the DA and DR due from July 1, 2021 will take into account the previous hike.

iv.In general DA will be revised twice a year in January and July in line with inflation trends.

Union Cabinet approvals

  • A 30% pay-cut for a year to President Ram Nath Kovind, Vice President Venkaiah Naidu and Prime Minister Narendra Modi as well as Union ministers and Members of Parliament and governors of all states with effect from April.
  • Temporary suspension of Members of Parliament Local Area Development Scheme (MPLADS) Fund of MPs for 2 years 2020-21 and 2021-22.

Key Points

i.The money saved through these will go to the Consolidated Fund of India for managing health services and the adverse impact of the COVID-19 pandemic in the country.

ii.In addition to healthcare costs, the government also faces the burden of providing boosters or stimulus to sectors and industries hit by a nationwide lockdown.

iii.The government has announced Rs 1.7 lakh crore economic package, comprising free food grains and cooking gas to the poor and cash dole to poor women and elderly.

iv.The 2nd package aimed at industries is likely to be announced shortly.

About MPLADS:

  • It is a Central Sector Scheme launched in 1993-94. The scheme enables the MP’s to suggest to the District Collector about the tune of Rs 5 Crores per annum to be taken up in their constituency in the area of national priorities namely drinking water, education, public health, sanitation, roads among others.
  • The Ministry of Statistics and Programme Implementation (MOSPI) is responsible for the policy formulation, release of funds and to prescribe the monitoring mechanisms for implementation of the Scheme.

Minister of State of MOSPI– Rao Inderjit Singh