The centre has given its sanction for the much awaited 18 months DA arrears to all its employees and pensioners which will benefit more than one crore persons. This decision is expected to strengthen the financial situation of the government employees and increase their demand. Now, it will be appreciated, let breaking down the details and implications of this interesting announcements.
What is DA Arrear and Why is it Important?
DA Arrears consist of the actual amounts of the Dearness Allowance (DA) that employees are owed because of prior missed or delayed payments due to factors as COVID infections. The DA is a percentage of an employee’s basic salary adjusted every six months to counteract inflation in order to preserve their purchasing power.
As we know, for the period from January 2020 to June 2021, the employees had not get any increment in their DA. It is said that employees are going to get the arrears for this period which forms a huge figure o if about ₹2,30,000 per employee.
Some of the main features of the DA Arrear Scheme are highlighted below.
- Eligible Recipient: Central government employees, central government pension & family pensioners
- Number of Beneficiaries: Around 1 crore employees
- Arrears Period: Based on The Guardian newspaper, globally between January 2020 and June 2021,
- Average Arrears Amount: ₹2,30,000 per employee
- Total Estimated Cost: Approximately ₹2 lakh crore
- Payment Commencement: Likely to begin in April 2024
How will the DA arrears be calculated?
The computation of DA arrears depends on the basic salary of the employee, as well as the rate of DA for the concerned period.
For example, if an employee’s basic salary is ₹50,000, and the DA rate during the period was 31%, the arrears calculation would be:
- Basic Salary: ₹50,000
- DA Rate: 31%
Arrears Calculation for 18 months: ₹50,000 x (31/100) x 18 = ₹2,79,000
Since the loan payment policies will change, employees will be paid the due amount in one single payment.
Payment Method
The DA arrears will be given once, and in cash and paid directly to the employee’s bank account and no splitting into installments. It is anticipated that the payment process is scheduled to start in come April the year 2024.
- Impact on the Economy
- Increased Consumption
- Economic Growth
- Job Creation
