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NEW DELHI : As government's finances come under pressure during the Covid-19 pandemic and lockdown, the finance ministry today announced that it has put on hold a hike in dearness allowance (DA) for central government employees and dearness relief (DR) for central government pensioners till July next year.

"In view of the crisis arising out of Covid-19, it has been decided that the additional installment of dearness allowance (DA) payable to central government employees and dearness relief (DR) to central government pensioners, due from 1st January, 2020 shall not be paid. Additional installments of DA & DR from 1 July 2020 & 1 Jan 2021 shall also not be paid," the Ministry of Finance said in a memo.

However, dearness allowance and dearness relief at current rates will continue to be paid, it said.

As and when the decision to release the future installment of DA and DR due from July 2021 is taken by the government, the rates will be restored prospectively and will be subsumed in the cumulative revised rate effective 1st July 2021. The government will not pay any arrears for the period in between 1st January 2020 and 30th June 2021.

The Union Cabinet had last month hiked the DA and DR by 4%, from 17% of basic pay/pension to 21% of basic pay/pension for central government employees and pensioners.

There are at least 50 lakh government employees and 65 lakh pensioners. The DA and DR hike would have cost the exchequer 37,530 crore in the current financial year and 2021-22.

The finance ministry had recently clarified that it is not making any cuts in central government pensions as salaries and pensions will not be affected by government cash management instructions.

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