Covid-19: Centre could defer dearness allowance hike for employees – business news
The government is discussing a proposal to defer payment of dearness allowance for some time and utilise the money to fund the fight against Covid-19, two people familiar with the development said, requesting anonymity.
The Union Cabinet had last month decided to raise the dearness allowance (DA) by 4 percentage points, from the existing 17 percent to 21 percent 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.
A finance ministry spokesperson insisted that there was no move to withhold the DA hike. “Not at all … as of now,” the spokesperson said when asked to comment on reports that the government could suspend the hike.
Holding back the 4 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.
Another official, however, said that various proposals were before the government.
“It is merely a discussion and not even a formal proposal. It is part of the government’s ongoing exercise to collect funds to fight the Covid-19 pandemic in this emergency situation. A suggestion has been made that DA be deferred and be paid as soon as the situation normalises,” one of the officials said.
Another official said the government has various fiscal measures on the drawing board and all options are being considered.
The official, however, underlined that the Centre had spared its employees any pay cuts carried out by governments in several states.
The political executive has already taken a 30 percent pay cut to message the need to conserve funds.
Prime Minister Narendra Modi and his cabinet colleagues had recently gone for a 30 percent pay cut for all ministers and all members of Parliament 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.