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HomeIndiaModi govt may not give annual increment to employees to save money...

Modi govt may not give annual increment to employees to save money for Covid, vaccination

Final decision is yet to be taken, but govt officials say the move will help save Rs 4,000 crore. Govt could also push ministries to scrap increments in firms under their control.

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New Delhi: The central government is considering skipping the annual increment to its employees this fiscal — a move that could potentially help the administration save Rs 4,000 crore, ThePrint has learnt.

Government officials said the administration wants to save up the money in light of the “unpredictability of Covid-19 and the vaccination drive”.

“We have initiated discussions to freeze annual increments for central government employees, which will be applicable at all levels. We will make a decision soon,” a senior government official told ThePrint.

Officials said discussion in this regard is going on with the various stakeholders concerned. The finance secretary has held meetings with secretaries of the ministry, and NITI Aayog officials to deliberate on the matter. 

A second government official said the Covid-19 pandemic severely impacted government income as the outbreak slowed economic activity and hurt revenue collection.

“The government is contemplating other measures as well to save money knowing the unpredictability of Covid-19 and also the vaccination drive, but a final decision is not taken yet,” the official added.

If the government goes ahead with the decision, it will affect 48.34 lakh central government employees.

In April, the government had put on hold the hike in dearness allowance (DA) for the employees to offset the increase in its spending on account of the pandemic.

It had announced a DA hike of 4 per cent in March. The DA of central government employees was increased to 21 per cent from 17 per cent, which was going to be effective from January 2020. This was expected to cost the government Rs 14,595 crore in 2020-21, but the Covid crisis forced the government to freeze the hike.

The government has already imposed a cap on spending by ministries and departments, and even passed a bill in September to reduce for one year the salaries of MPs by 30 per cent to meet the Covid crisis. It has also suspended the Member of Parliament Local Area Development Scheme or MPLADS for two years.

Also read: Pay and pensions of govt employees had risen too high. Covid is forcing welcome cuts

Govt planning to push to scrap increments at state-run firms 

The second government official said since the government has saved a big chunk of Rs 14,000 crore by freezing the DA hike, this time it wants to save money for its Covid vaccine drive and similar such needs for the future.

“The move will not harm employees because they were expecting a salary cut on the line of many state government employees. They will feel the necessity of this decision,” said the official.

The government is also planning to push some relevant ministries to scrap increments at state-run companies under their control, which will lead to additional savings, he added.

The pandemic has shrunk corporate and domestic income, and private consumption, which, in turn, has choked the Centre’s income.

The pandemic had a substantial impact on GST collection and the projected total GST compensation shortfall in the current fiscal stands at Rs 2.35 lakh crore. Of this, as per Centre’s calculation, shortfall of about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is due to the impact of Covid on states’ revenues.

Also read: Don’t cut salaries or fire workers during lockdown — Modi govt issues advisory


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  1. I agree that we need to save enough to cater to vaccination for all our citizens. But what kind of austerity drive is this. If government is so particular of money savings, why 2 AirOnes now, did the old planes crash? Why new parliament building when parliamentarians are hardly having any session, unlike govt. Servants with 100% attendance since July. Why can’t ministers cut down their election campaign which incurs huge cost on arrangements and security.

  2. Only 4000 crore is not sufficient to fight against this deadly virus and upcoming versions of the virus. Government should completely stop the salary of employees. Further sell the possessions their employees that they had gathered over years to curb the effect of this deadly virus.

  3. If government really serious on reviewing of economy then DA freeze order shall be revoked and continue with annual increment

  4. There should not be any proposal in this matter rather NDA government should should work for the welfare of its employees instead of squeezing them at this juncture. If proposal is passed, there will be revolution and democratic protest against the government for sure and the government must face the brunt of the masses.

  5. Why this govt is not going give DA for pensioners,I am getting only 16000/-,what can I do ? Medical expenses,for veg price & other price increase like mountain,but only increaseing DA for 6 month once, that also cut off ,is it good,from old age people taking money for distribution.please modi sir ask your soul ,whether doing is right yourself,don’t ask anybody,our heart is pure ,do good

  6. Source of the information is unclear; it’s preposterous and with an aim to malign the government..And even if it’s true, many who are at receiving end of the babus would welcome the fact…That Central Govt staff are a pampered lot and get more than fare share of their input.

  7. Not a good proposal. Already Central Government employees are the only regular tax payers. The amount of tax deducted is more than enough contribution to the government exchequer. Imposing the freeze on DA was also unwarranted. Now freezing the increment is another nail in the coffin. Why PSU should freeze? They have income from business process and if they can bear the cost then why freeze?

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