What is dearness allowance Why Dearness Allowance is in the news?

Dearness allowance news for central government employees

Dearness Allowance is in the news these days. It is in the news for the reason that Central Government will Not Hike DA For Its Employees and pensioners for this financial year 2020-2021. So lets first discuss what dearness allowance is, How it is calculated, what percent of salary a person get dearness allowance.

What is dearness allowance

Concept od Dearness allowance was first introduced at the time of the second world war. The name knows it as “Dear Food Allowance” at that time.

Dearness Allowance is the calculation on inflation and allowance paid to government employees. It is given to The Government Employees of both Central And State Employees, All Employees Working in Public Sector Employees, and also to the pensioners of both central and state government and Public Sector Employees.

It is calculated on the salary of employees, and employees get some percentage of the salary as Dearness Allowance (DA), and it is provided to overcome the effect of inflation. The current Percentage of DA is 17% .which means employees get 17% as Dearness Allowance.

Percentage of Dearness Allowance Revised Twice in a year, i.e., January and July.

Dearness allowance for 2019 is 17%, which the government has decided to increase 4% after this increase it has to be 21% but due to the corona pandemic government has withdrawn its Decision of hiking Dearness Allowance.

How to Calculate Dearness Allowance

Dearness Allowance is calculated on the basic salary.

For Central Government Employees

Dearness Allowance % = ((Average of AICPI (Base Year 2001=100) for the past 12 months -115.76)/115.76)*100

AICPI Stands For All India Consumer Price Index

For Public Central Employees (PSE)

Dearness Allowance % = ((Average of AICPI (Base Year 2001=100) for the past 3 months -126.33)/126.33)*100

Where AICPI stands for All-India Consumer Price Index.

Dearness Allowance For Pensioners

For Pensioners, it changes when there is a change in the salary structure of employees, means whenever the government revised its pay scale pension gets revised and with revision in pension DA also gets reviewed.

Is Dearness Allowance for private-sector employees?

No, Dearness Allowance is not for Private Employees It is scheme By government for its employees

Does Dearness Allowance Vary Location Wise?

Yes, Dearness Allowance Vary Location For example, in metro cities, there is more inflation as compared to Tier-2 And Tier-3 Cities.

Now Let’s Talk about Why Dearness Allowance is in the news.

Government of India Told Via memorandum on April 23, 2020, That it in a meeting, it has decided that it will hold the increment in Dearness Allowance for all its employees. In March 2019, it approved the hike of 4% in Dearness Allowance. Memorandum further states that no arrears will be paid from January 1, 2020, to June 30, 2021. However, any hike in DA due to revision on July 1, 2021, will take into account the previous hikes as well.

The Decision of rollbacking the Dearness Allowance Will also affect the pensioners and there Family.

This Decision of withdrawing hike in DA came after Prime Minister And MLA opted for 30% salary cut and suspension of Members of Parliament Local Area Development Scheme fund for Two Financial Years i.e., 2020-2021 and 2021-2022. Now states are likely to follow the same.

It is estimated that it will help the government to save 1 lakh crore rupees, and the government can use this fund in fighting against Corona Pandemic. Due To this pandemic, there will be a massive loss to the economy of India, and the government is looking at ways it can save money and use that money for announcing the economic stimulus package.

It is believed that the government may release a second stimulus package in a day or two.

Read :- TCS Q4 Result:Revenue Increases to Rs 39946 Crore But Profits Fall Marginally

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