DA delays and arrears: How Kerala govt shortchanged its employees during the highest inflation years

When Leader of the Opposition V D Satheesan said that "no one would believe this budget," Finance Minister K N Balagopal's announcement on dearness allowance (DA) for employees and dearness relief (DR) for pensioners seemed almost designed to prove his point.

In the last Budget of the second Pinarayi Vijayan-led government, Balagopal announced on Thursday, January 29, that all pending DA and DR instalments would be released in full. Six instalments have been pending since July 2023, together accounting for 15% DA.

According to the Budget speech, the 3% DA due from July 2023 will be released with the February 2026 salaries, while the remaining 12% -- covering the period from January 2024 to January 2026 -- will be released with the March salaries.

But there's no closure for government employees. Just between January 2019 and October 2024, dearness allowance and dearness relief were delayed for a cumulative 255 months, pushing arrears to at least Rs 1 lakh crore, said Dr Shino P Jose, state secretary of the All Kerala Private College Teachers' Association.

Dearness Allowance and Dearness Relief (for pensioners) are meant to offset the loss of purchasing power caused by inflation and are sanctioned twice a year -- on January 1 and July 1 -- based on the All India Consumer Price Index (AICPI). The denial of DA and DR arrears comes at a time when people of Kerala are battling the highest inflation in the country.

The government has taken a position in the High Court that employees were eligible for DA only from the date of announcement, and it would not clear DA arrears. The government went further and said DA is not a right of the employees but a prerogative of the administration, a policy decision.

But in the budget speech, the Finance Minister said the arrears would be "paid gradually". He also said the amount for the first instalment to be disbursed in the budget year has been earmarked, he said.

Employee organisations said the Minister's announcement was misleading, considering he did not announce the amount set aside to clear the arrears, nor did he announce a time frame. "The announcement directly contradicts the Finance Department's affidavit before the High Court," said Jayan Chalil, general secretary of the Federation of University Employees' Organisations, which has challenged the DA policy legally.

"If the Finance Minister does not agree with the affidavit, as he hints during media interaction, he has made no effort to withdraw it," said Chalil, a computer programmer at Kannur University. But the government's actions are in alignment with the affidavit, he said.
Over 10 years, employees are entitled to 20 DA instalments. Under the two LDF governments led by Pinarayi Vijayan, only 14 instalments have been sanctioned so far.

More tellingly, in nine of those 10 years, DA and DR were announced with long delays. During the first two years of the first Vijayan government, delays did occur, but the DA was implemented retrospectively. Between July 2016 and July 2018, the government sanctioned 11% DA in five instalments. The DA for July 2016 and January 2017 was released on time. The problems began thereafter.

The DA due in July 2017, January 2018 and July 2018 was announced with delays ranging from nine to 15 months. Still, those instalments were given retrospectively, just like previous governments, said Jayan Chalil. That convention ended after July 2018.

The next DA announcement came only in March 2021, on the eve of the Assembly election, alongside the pay revision. The government cited the COVID-19 pandemic for the delay. Four instalments -- January 2019, July 2019, January 2020 and July 2020 -- were merged, and instead of releasing them along with the salaries, the government said it would credit them to employees’ Provident Fund accounts.

But even here, only the DA from the date of announcement was deposited. The arrears generated by delays of eight to 26 months were not paid. There was another catch. Each instalment came with a separate lock-in period, stretching from April 2023 to September 2024.
But when those dates arrived for employees to withdraw their money, the government extended the lock-in again.

On March 25, 2025, an order finally allowed withdrawal of 50% of the DA parked in PF accounts. There was no word on the remaining DA, held up since 2019. "Even today, the Finance Minister has not spoken a word about 50% of our DA supposedly deposited in PF accounts," said Chalil.

From 2021, DA instalments continued to be announced after extraordinary delays, but without any retrospective effect at all. The DA due in January 2021 was announced after a delay of 39 months. The July 2021 instalment came after 39 months. January 2022, after another 39 months. July 2022, after 37 months. January 2023, after 33 months.

Between January 2019 and October 2024, employees and pensioners effectively lost 31% DA and DR. In cumulative terms, the government denied them inflation protection for 255 months.

Clearing just six instalments of DA -- announced in the budget -- would cost the exchequer around Rs 3,000 crore, employee organisations estimate. "Delaying DA defeats the very purpose of the allowance," Chalil said. "It is meant to help employees survive inflation."

The timing could not have been worse. Kerala has been recording the highest inflation in the country. Government data released on January 12, 2026, showed inflation in the state at 9.49% in December 2025, up from 8.27% in November, nearly seven times the national average. Karnataka, the next highest, stood at 2.99%. “It is a double blow," said Dr Jose. "We face the sharpest rise in prices in the country, and the government pulls the cushion away.”