The government has frozen inflation-linked increase in salaries and pension of over 1.1 crore central government employees and pensioners. The decision has been taken to generate around Rs 76,000 crore to deal with coronavirus outbreak.

The decision will be effective from January 1, 2020 and remain applicable till July 2021. This would encourage many state governments to freeze salaries for employees, after some had already announced wage cuts. Last month, the Centre announced a 4 per cent rise in DA for its employees and pensioners with retrospective effect from January 2020 costing Rs 27,100 crore in the current financial year beginning April. The order has also been withdrawn.

By these measures, the government is expected a total savings of more than Rs 70,000 crore from an 18-month freeze. The central government has nearly 48 lakh employees and 65 lakh, pensioners. The PM had already announced a 30 per cent cut in salaries for central ministers, the president and members of parliament and froze discretionary spending by lawmakers for two years.