The government has put on hold increase in dearness allowance for its employees because of the strain on its finances due to Covid-19. The union cabinet will on Wednesday take up a proposal to put a hold on any further increase for the current year.

The union cabinet had approved an increase of 4% to DA in March to 21%. A government source told ET that the increase has been put on hold.

The government’s tax revenues have plummeted because of the Covid-19 lockdown while expenses have shot up because of the support provided to the vulnerable groups.

This will impact about 49.26 lakh central government employees and 61.17 lakh pensioners.

The government revises dearness allowance twice a year to compensate for the rise in prices. Next revision is now scheduled in July.

This is the first Covid-19 impact on central government employees. The government had earlier cut salaries of ministers, PM, president and members of parliament by 30%. In addition, there MPLADs scheme has also been suspended for two years to provide more funds to fight the coronavirus pandemic. The total savings on the scheme would be about RS 8,000 crore.

May states have already announced a reduction in salaries of their employees.

Source Article