Around 20 lakh employees working for the government of Tamil Nadu, including teachers of government aided schools, will stand to lose anywhere between Rs 22000 to Rs 1 lakh per person this year due to COVID-19.
On Monday, the Tamil Nadu government released a notification which said that the Dearness Allowance (DA) paid to government employees with their salaries will be frozen at the current rates till July 2021. As per the notification, the decision to freeze the DA comes after the central government announced a similar decision vide a memo dated April 23. Reports say that the state government will be saving at least Rs 4,500 crore as a result of this decision, which will come in handy at a time when Tamil Nadu is reeling under the COVID-19 crisis.
The freeze in DA, as per the government order, is applicable to “all state government employees, teachers, pensioners and family pensioners including teaching and non-teaching staff working in aided educational institutions, employees under local bodies, employees governed by the University Grants Commission/All India Council for Technical Education pay scales, teachers/physical education directors/librarians in government and aided polytechnics and special diploma institutions, village assistants in revenue department, noon meal organisers, child welfare organisers, anganwadi workers, cooks, helpers, panchayat secretaries/clerks in village panchayat under rural development and panchayat raj department and other employees drawing pay in the prescribed level of pay in the Special Pay Matrix.”
Dearness Allowance is paid to government employees and pensioners as a percentage of their basic salaries, to cushion the impact of inflation on the country’s economy. In Tamil Nadu, DA is revised every six months. The last notified revision took place in July 2019, when the DA was increased from 12% to 17%. Another revision which was due in January 2020, amounting to 4%, was announced by the central government in March 2020 (with retrospective effect from January 2020) but was yet to be notified by the state government.
The TN government’s decision to freeze DA at 17% till July 2021 has left government employees in the state worried. Many of them have EMIs, housing loans and other financial commitments that are dependent on the monthly salaries they get.
Speaking to TNM, PK Ilamaran, State President of the Tamil Nadu Teachers Association, says that it is unfair of the government to say that they will not pay the arrears for the months of January 2020 to July 2021 either. “This will cause a lot of tension in the minds of government employees because they also have commitments. Whatever relief, like house rent, school or college fees are all suspended or deferred and not cancelled. Which means at some point we have to pay them. But without suitable income how will the employees manage?” he asks.
Another crucial aspect of the government’s decision to hold back the DA hike is that it will have an adverse impact on the pension that government employees will earn if they retire anytime between January 2020 and July 2021.
“The pension for many government employees is based on their last drawn salary, which usually includes the DA as well. But for those who will retire in these 18 months, their last salary will be way lesser which will affect the pension amount that they receive after retirement,” Ilamaran says.
Was there an alternative solution for the state government?
Retired bureaucrat MG Devasahayam says the root cause of the financial crunch faced by Tamil Nadu, which led to this decision, is the concentration of financial powers in the Centre’s hands.
“Earlier, when we had state and central taxes co-existing, states had full power to scale up the taxes when they need more money to deal with a particular situation. Now with the Goods and Services Tax (GST) in the picture, states are left with only the taxes out of liquor and stamp duty, which is totally shut down now. What else will state governments do to get money?” he asks.
Under GST, all the taxes on goods and services goes to the central exchequer and a portion of it is then given to the state governments based on certain criteria.
Understandably, Tamil Nadu Chief Minister Edappadi K Palaniswami has been constantly requesting Prime Minister Modi, even as recently as on Monday, to release the GST dues pending for the month of December-January to help the state combat COVID-19.
Slamming the Reserve Bank of India (RBI) for being a quiet spectator and failing to be an autonomous institution, Devasahayam also points out that the RBI can infuse funds in the form of various types of credit and advances to the state governments to tide over the crisis.
“But they (RBI) now listen only to the Centre,” Devasahayam adds.