Recently, amid COVID-19 pandemic, the Central Government and the Delhi State Government have decided to freeze any increase in the Dearness Allowance of all the government employees, including pensioners and until July 2021. However, a PIL (Public Interest Litigation) has been filed against the central and state governments.

What do you mean by dearness allowance?

To reduce the impact of inflation in India's economy, the government pays dearness allowance to its employees. It helps the employees to cope up with the rising prices of the commodities. However, the rate at which it is calculated varies, and it depends upon the place where the employees are located i.e., metropolitan or rural zone.

Every year it is calculated in January and July, i.e., twice in a financial year. It is of two types:

· Industrial Dearness Allowance: it applies to public sector employees.

· Variable Dearness Allowance: it is the revision of the six months allowance.

Why was dearness allowance freeze?

The move was taken by the Central Government to raise sufficient relief fund for those who are fighting from this COVID-19 pandemic. By freezing the dearness allowance of their government employees, the government will be able to save a significant amount that will also help them to regulate any fund allocation deficiency, which will be faced at this hour.

Also, in this period of crisis, the most affected part of the society will be the MSME sector, who generate sufficient flow of cash through goods and services they provide to their customer. Some small businesses might also shut down due to this, which will ultimately even make them fall in debt-trap and loan stressed. The MSME sector also generates employment mainly in the urban area, and due to the non-availability of sufficient flow of cash, the employment graph could also fall.

There are other sectors also which are affected adversely due to lockdown that includes tourism and hospitality, aviation, automobile, and real estate. All these sector employees are presently facing a rise in unemployment and a significant percentage of salary pay cut-offs. The daily wage worker or labour class is also affected due to lockdown because of the inactivity of these sectors; they are failing to provide wages to them.

However, the inactivity in all these sectors is going to cause a significant setback to India's economy as there will not be a sufficient flow of cash from these vital sectors. Hence, to cover all these deficiencies, the government took this decision.

Currently, which other state have decided to freeze the dearness allowance?

In support of the decision of the Central Government, few states confirmed implementing it. They are as follows:

· Delhi

· Uttar Pradesh

· Tamil Nadu

· Maharashtra

What are the arguments made by the petitioner in the plea against the central government's decision?

The arguments that are made by the petitioner N. Pradeep Sharma in the plea against the central government decision are as follows:

· The petitioner raised an issue against the decision stating that freezing of the dearness allowance is a violation of Article 360 of India's Constitution when there are no financial crises.

· The changes in the salary scheme can only be made through the passing of any legislation in the parliament, act or rule because if otherwise, there will be a violation of the right to receive a salary that falls under article 300A of the constitution.

· The petitioner also contended that even during any disaster government cannot deny giving salary as per the Disaster Management Act, 2005.

· Article 309 of the Constitution ensures the right to receive a salary.

Critical Analysis

The decision taken by the Central Government to freeze the dearness allowance of its employees and pensioner will directly impact the lives of these middle-class employees, including army personnel, public sector employees, and those working under government services. Though the government took a stand that this decision will help the coronavirus warriors, but the need for this sudden decision without any financial emergency felt unnecessary by the petitioner.

The main objective of providing government employees with a dearness allowance was to balance the salary with the fluctuation in the economic cycle so that they can afford essential commodities, for instance, diesel, petrol, grains, etc. However, this decision will accumulate a good amount of funds, and this fund will help in covering any financial deficiency. At the same time, the middle-class society will suffer if the proper allocation of funds doesn't take place by the government.

The contentions that are being made by the petitioner are to get a proper reason for implementing it when, at present, there is no need for funds by the government. The PM Cares fund currently has sufficient funds that are being raised through a donation to help those sectors who are in need. The freezing of DA will also adversely impact on India's economy as there sufficient expenditure will not be made on the part of the middle-class family who is the primary reason for maintaining balance in the economy.


The freezing of dearness allowance has brought chaos to the life of the government employees. Although, at this hour there is a need of funds the Central Government without any financial emergency cannot freeze their employee's right to receive a salary which is going to affect the life of the middle-class, as they won't be able to spend enough money on essential commodities and if there will be a deficiency inflow of cash the economies GDP rate also suffer.

Also, due to lockdown, major sectors will suffer, which will also raise the country's unemployment rate. However, the plea is still pending in the High Court of Delhi, and the decision will soon be taken.


Samridhi Srivastava

Lloyd Law College

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