Dearness Allowance: A Legal Right

(Prelims Exame :- Current Affairs and Political Events)
(Mains Exame, General Studies Paper-2:- Government policies and interventions for development in various sectors and issues arising out of their design and implementation)

Reference

On May 16, 2025, the Supreme Court directed the West Bengal government to pay 25% Dearness Allowance (DA) to its employees.The court has given the state government three months to make the payment.

About Dearness Allowance

It is an additional amount given to government employees and pensioners to help them deal with rising prices.
It started in India in the 1970s, when the government implemented it in view of the rising level of inflation.
Since then, this allowance has been revised from time to time and at present it has become an important part for government employees.
It is calculated on the basis of Consumer Price Index (CPI). When CPI increases, dearness allowance also increases. This allowance is usually a fixed percentage of the basic salary or pension of the employees.

Key Benefits

Employee satisfaction: Dearness allowance increases the satisfaction of employees which improves their efficiency.
Talent preservation: This allowance helps in retaining employees in the organization which in turn preserves talent.
Social security: Dearness allowance is an important part of social security which supports employees in times of economic crisis.

About the recent issue

The DA paid to the government employees in West Bengal has been much less than that of the central government employees due to which employees have been protesting for a long time.
- Currently, the central government gives 55% DA to its employees.
- Whereas, West Bengal state government employees get 18% DA on April 1, 2025 after adding an additional 4% to the existing 14%.
- There is still a gap of 37%.

Supreme Court Decision

The court has ordered to pay 25% of the DA arrears.
The state will have to incur an additional expenditure of ₹10,000 crore to pay this 25% arrears.
Dearness Allowance is a legally enforceable right by this Supreme Court decision.

Other Related Cases

In the case of Nakul Beri vs Union of India (1986), the Supreme Court held that DA is an integral right of the employees which balances their cost of living.
The Kerala High Court in one of its decisions in the year 2021 held that DA is an integral right of the employees. Non-payment of DA is discrimination against employees and violates Article 14.

Challenges

Fiscal pressure: Increase in DA increases government expenditure which may increase fiscal deficit. This is especially challenging during economic slowdown.
Uneven implementation: Some state governments delay DA payments which leads to discontent among employees.
Lack of private sector: DA is mainly limited to government employees which creates a sense of inequality among private sector employees.

Way forward

Policy reforms: An automated and transparent mechanism should be developed for calculation and revision of DA.
Inclusion in private sector: Similar measures to tackle inflation can be considered for private sector employees as well.
Awareness: Campaigns should be launched to make employees aware of their legal rights related to DA.