It is a significant announcement for government employees and pensioners. The government has declared 18 months of back pay and a 56 percent rise in dearness allowance. This decision holds a promise of financial security in the lives of millions of employees.
Need And Importance Of DA
Dearness allowance or DA is an important part of salary government employees receive to bear the burden of increased cost of living and currently at a very high price due to increased inflation which, with this announcement, is expected to provide a level of reprieve to employees. The arrears refer to amounts owed and not yet released for the past time periods. Therefore, this latest announcement makes it possible for employees to receive 18 months’ back payments from January 2020-June 2021, and such a bulk amount will surely assist in ameliorating the financial position of employees.
Major Beneficiaries Of The Scheme
Central government employees and pensioners will be the main beneficiaries of this scheme. However, this can be taken up by the states at their discretion. Crores of government employees across the country will benefit from this. As far as the 56 percent increase in dearness allowance is concerned, it is going to cut into the monthly income of the employees. This will vary according to the pay scales, such that an employee with a month’s wage of Rs 20,000 can expect an additional Rs 11,200 in income. On the other hand, an employee drawing a salary of Rs 50,000 will benefit by around Rs 28,000.
Economic Impact Of The Arrears
Payment of 18 months’ arrears would end up costing the employees a huge amount. They would, therefore, be able to save more, and invest more, and the consumption expenditure at the same time will increase the cash flow in the market, thereby given an impetus to the economy. This has been a policy of the central government; state governments may adopt them according to their financial condition. However, some state governments have already indicated plans to replicate such benefits for their employees.
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