Country headed towards financial emergency

The government’s actions are clear pointers that COVID-19 is not the only danger India faces

Country headed towards financial emergency
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Kumud Das

The government, via an office memorandum, recently announced that it has put on hold the hike in dearness allowance (DA) of central government employees and pensioners for the year. In March, the Union cabinet had approved an increase of 4% in DA to 21%. The central government employees and pensioners will now continue to get DA at current rates, i.e. 17% as part of their salary/pension, the office memorandum added. However, the more worrisome part is that the memorandum stated that no arrears would be paid from January 1, 2020 to June 30, 2021.

As hike in DA for central government staff is reviewed once every six months, the next date revision is July 1, 2021 which will take into account previous hikes as well.

"It has been decided that the additional instalment of Dearness Allowance payable to Central Government employees and Dearness Relief to Central Government pensioners due from 1st January 2020 shall not be paid. The additional instalment of Dearness allowance and Dearness relief due from 1st July 2020 and 1st January 2020 shall not be paid. However, Dearness Allowance and Dearness Relief at current rates will continue to be paid." The memorandum read.

But, this is not the only step which has been taken by the government. A host of other harsh measures have been taken on the plea that the government needs money to tackle the COVID-19 pandemic.


It all started a few days back when the government said that it would cut 30% of the salary of the Members of Parliament for one year and no MPLAD funds. Parliamentarians are each given ₹5 crore per year for their local area development projects. The government hopes to save ₹7,900 crore this way.

In another distressing development, the government has asked all employees of central government to contribute a day’s salary every month for the next one year to the PM Cares fund. Though it is voluntary, central government employees have not been happy about it.

The government had promised to contribute the 12% that employees contribute towards their PF. However, it took a U-Turn at the eleventh hour and said that it will not be able to fulfil its promise.

All these say that the country is not just battling the COVID-19 pandemic, it is also headed towards a financial emergency

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