With tax revenues taking a hit during the coronavirus lockdown, the central government has decided to delay the implementation of its recent decision to hike the dearness allowance from 12 per cent to 17 per cent. The Centre's move will affect about 50 lakh government employees and 65 lakh pensioners.
"It has been decided that the additional installment of dearness allowance payable to central government employees and dearness relief to central government pensioners, due from 1st January 2020, shall not be paid," read a statement from the Centre.
On March 13, the cabinet had agreed upon increasing the DA by 5 per cent which would have cost the exchequer an additional Rs 14,510 crore in FY21, according to reports.
As the country is on a 40-day nationwide lockdown to fight the coronavirus pandemic, the government is facing a cash crunch due to the virtual freezing of the majority of business activities since March 24. This has taken the Indian economy for a toss, subsequently putting a strain on the government’s finances.
The government also recently announced a string of cost cutting measures including slashing the budget allocation of most departments by up to 40 per cent.
On 6th April, the Union cabinet approved an ordinance to reduce the salaries, allowances and pensions of Members of Parliament (MPs) by 30 per cent for one year and the amount will be utilised in the fight against the coronavirus.
The President, Vice President and governors of states have also voluntarily decided to take a pay cut as a social responsibility, Union minister Prakash Javadekar said.