Introduction to DA Arrears

Central government employees and pensioners have been awaiting a decision on the payment of Dearness Allowance (DA) arrears that were frozen during the COVID-19 pandemic. The DA hike, which is typically increased twice a year, was halted for 18 months from January 2020 to June 2021 to ease financial pressure on the government. This pause resulted in three missed installments of DA, which employee unions have been demanding be paid as arrears.

Background on DA Hikes

The Dearness Allowance is a component of the salary of central government employees and pensioners, aimed at offsetting inflation. It is adjusted based on the All India Consumer Price Index for Industrial Workers (AICPI). Under the 7th Pay Commission, which came into effect in January 2016, DA has been increased regularly, except during the pandemic period. The current DA rate stands at 53%, following a 3% hike in October 2024.

The Issue of Frozen DA Installments

During the pandemic, the government froze three DA installments to manage its finances better. These installments were due from January 2020, July 2020, and January 2021. Employee unions have been pressing for these arrears, arguing that they are entitled to them as part of their compensation package.

Key Demands of Employee Unions

The Confederation of Central Government Employees & Workers has been at the forefront of demanding the payment of these arrears. Their key demands include:

• Payment of DA Arrears: The unions are seeking compensation for the DA installments that were not paid during the pandemic.
• Restoration of Old Pension Scheme (OPS): They want the New Pension Scheme (NPS) to be abolished and the OPS reinstated.
• Filling of Vacant Posts: Immediate filling of vacant positions in government departments.
• Abolition of Outsourcing and Privatization: Stopping outsourcing and privatization in government departments.
• Compassionate Appointments: Removal of the 5% limit on compassionate appointments.

Government's Stance on DA Arrears

Despite repeated demands, the government has maintained that paying these arrears is not feasible due to the financial strain caused by the pandemic and subsequent welfare measures. In a recent response to a query in the Lok Sabha, the Minister of State in the Ministry of Finance, Pankaj Chaudhary, reiterated that the decision to freeze DA installments was taken to manage economic disruption and that releasing arrears would not be possible.

Current DA Hike Scenario

As of now, central government employees are expecting a new DA hike, which is likely to be announced soon. The hike is expected to be around 2%, which would be the lowest in seven years. This increase will be effective from January 2025 and will include arrears for March and April.

Impact on Employees

The non-payment of DA arrears has been a significant concern for central government employees and pensioners. Many have been relying on these increments to keep pace with inflation. The lack of clarity on whether these arrears will be paid has led to widespread discontent among employees.

Future of DA Under the 8th Pay Commission

The government recently announced the formation of the 8th Pay Commission, whose recommendations will be implemented from January 2026. This means that the current DA system will undergo changes, as DA is typically merged with basic pay under new pay commissions. Employees will receive one more DA hike under the 7th Pay Commission before the new system takes effect.

Conclusion

The issue of DA arrears remains unresolved, with employee unions continuing to push for their payment. While the government has been firm on not releasing these arrears, the ongoing protests and demands highlight the urgency of addressing these concerns. As the central government prepares for another DA hike, the focus remains on whether any concessions will be made regarding the frozen installments.