CPI Current Affairs - 2020

COVID-19: Hike in Dearness Allowance for the year 2021 put on hold

The Government of India on April 23, 2020, put on hold to the hike in dearness allowance. This is being done by the union government to save Rs 1 lakh crore.

Highlights

The hold in the hike of dearness allowance applies only to central government employees and pensioners. Currently, the central government employees are receiving Dearness Allowance at 17% of their salary. The Government had planned to increase the allowance by 4%.

What is Dearness allowance?

Dearness Allowance is received by pensioners and government employees. The DA is revised twice every year in the month of July and January. The allowance is provided to the employees and pensioners to compensate inflation.

Around 8.5% of the Union Budget is used as salaries to the central government employees.

History

The concept of Dearness Allowance was introduced during World War II. In India the Dearness Allowance was introduced as Old Textile allowance in 1947. It was then reintroduced as Revised Textile Allowance in 1953. DA was first linked to wage revision of employees. It was later linked to the Consumer Price Index.

Retail inflation increases to 2.57% in February 2019

The Central Statistical Office (CSO) has released the data of Inflation for the month of February 2019. The data shows that:

  • Retail inflation was at a four-month high of 2.57 per cent in February 2019 due to costlier food articles. The retail inflation was highest since October 2018 when it stood at 3.38 per cent.
  • Consumer Price Index-based inflation for January 2019 was revised down to a 19-month low of 1.97 per cent from an earlier estimate of 2.05 per cent.
  • Food inflation at (-) 0.66 per cent in February 2019 was lower against 3.26 per cent in the same month last year.
  • The consumer food price index increased by 0.15 per cent in February against January 2019.
  • The prices of Protein-rich items such as meat & fish and eggs witnessed a quick rise in prices at 5.92 per cent and 0.86 per cent respectively in February.
  • The prices of cereal and products went up at 1.32 per cent.
  • Fruits and Vegetable prices continued their declining trend.
  • In the fuel and light category, the rate of price rise slowed to 1.24 per cent from 2.20 per cent in January.

With the headline inflation reading at 2.57 per cent and industrial production growth on the downside at 1.7 per cent, economists see a case and space for one more rate cut of 25 bps by RBI in April to support growth.