DA/DR dues payment, 12th pay commission & Assured pension scheme: What Kerala budget offers govt staff & pensioners?

Kerala Finance Minister K N Balagopal on Thursday sought to ease the nerves of government employees and pensioners with a slew of announcements regarding payment of dues, constitution of pay commission and assured pension. The Minister promised disbursal of remaning DA/DR (Dearness Allowance/Dearness Relief) instalments of government employees and pensioners in full while presenting the state budget 2026-27. The move comes amidst ongoing legal battles over payment of dues. 

Recently, the state government came in for severe flak after the Finance department submitted in the High Court that DA shall not be considered as a right of an employee and that it is not a compulsory statutory benefit. The statement, which riled up the government employees, was filed in the counter-affidavit submitted in the HC against the petition of a group of non-teaching staff of various universities. 

The petitioners had moved the HC with a plea to implement the overdue revision of DA with effect from January 1, 2021 in accordance with the formula linked to the All India Consumer Price Index (AICPI). While the Finance Minister later disowned the statement and pledged allegiance to the interests of the employees, mounting dues continued to cast doubts. The government had persistenly cited financial crisis as an excuse for delay in payment of dues.

In the budget speech, Balagopal said that one instalment of DA will be disbursed with the salary for the month of February and remaining instalments will be sanctioned completely with the salary for the month of March. The arrears of DA and DR will be paid gradually. The amount has been earmarked to disburse the first instalment in the budget year," the Minister said.

The Minister also announced the 12th pay revision commission. The report of the commission will be presented in three months. The announcement assumes significance in the context of an ongoing hunger strike by the Kerala Government Medical College Teachers Association. According to the association, the roots of the current crisis traces back to July 2025, when doctors first began protesting against the government’s decision to freeze salary revision arrears for medical faculty while releasing them for other state employees. 

Despite multiple rounds of negotiations with the Health and Finance Ministers—most recently on January 12, 2026—the government's subsequent orders have been met with widespread disappointment. The KGMCTA argues that the latest government order offers only a partial allowance for entry-level doctors with no retrospective effect and no continuity into future pay scales, effectively leaving the majority of the medical fraternity without any tangible benefit.

​The association has also expressed deep resentment over the perceived lack of justice from the Finance Department. 

The Minister also followed up on the declaration of an assured pension scheme instead of contributory pension scheme for government employees in the previous budget. According to the budget document, the assured pension scheme will ensure that 50% of the last basic pay will be received as maximum pension and DR will be allowable.  

There will be an option for changing from the existing NPS to assured pension scheme. The Minister added that arrangements will be made to manage the contribution of employees and government as separate fund. An order with detailed guidelines will be issued to implement the assured pension scheme on April 1.