DA deadline ends, Punjab eyes middle path: may pay 6% interest on dues

As the deadline for clearing pending Dearness Allowance (DA) arrears in Punjab approaches, the government is seeking a middle ground to address the issue. Rather than immediately paying the overdue amounts, the administration is considering offering 6 per cent interest on the arrears. The Punjab government has also suspended the implementation of orders passed in cases related to the DA dispute.

On Monday, the Finance Department sent a letter to all administrative departments, mandating them to submit details of cases decided based on high court orders in the Nirmal Singh Dhanoa case and related matters. The letter emphasizes that departments cannot implement such orders independently, requiring prior approval from the Finance Department or adherence to general guidelines, whichever comes first.

This development followed a recent high court decision dismissing the Punjab government's appeals against a single judge's April 8 order directing the release of pending DA instalments within two weeks. The court ordered the State and the Punjab State Power Corporation Limited to release all current pending instalments at the same rates as those applicable to IAS, IPS, and IFS officers in Punjab, with simple interest of 6 per cent per annum on any unpaid amounts.

The government is awaiting a meeting between Chief Minister Bhagwant Mann and employees on August 27 to discuss a middle path solution. Employee organizations have been advocating for a compromise to avoid further legal action, potentially heading to the Supreme Court. The DA dispute centers on the disparity between the allowance paid to Punjab government employees and pensioners and that paid to All India Service officers and central government employees.

Currently, Punjab employees receive DA at 42 per cent, while central employees receive 60 per cent. The gap, amounting to 18 percentage points, has been a long-standing concern for employee groups. The controversy stems from the implementation of the sixth Punjab Pay Commission, which recommended that DA follow the central government pattern.

In April 8, the high court ruled that Punjab could not indefinitely defer DA payments due to financial constraints and ordered the release of all pending instalments by June 30. The government appealed this decision before the Division Bench, which upheld the basic directive but extended the deadline to two weeks for clearing the pending DA instalments.

The court also cautioned the state against engaging in unproductive expenditure, such as large-scale advertising campaigns, until the dues are settled. The financial burden is estimated at around Rs 22,000 crore, and the government has argued before the court that its financial constraints make immediate clearance challenging.