Why SC ordered West Bengal govt to pay Dearness Allowance arrears worth Rs 11,000 cr

Indian Express

03-06-2025

The Supreme Court on May 16 directed the West Bengal government to release 25% of the outstanding Dearness Allowance (DA) arrears to its employees within six weeks. This would amount to Rs 11,000 crore and benefit nearly 10 lakh employees, sources said.
The interim order offers partial relief in a long-standing dispute over pay parity with central government employees. However, it would also significantly burden the state government's finances. What is the issue, and why has the West Bengal government opposed increasing the DA in the past? We explain.
Dearness Allowance is paid to government employees and pensioners in addition to their salary to manage the impact of inflation. It is calculated as a percentage of the basic pay or pension. Typically, the All India Consumer Price Index-based inflation rate is used for calculating increases in the cost of living. For greater effectiveness, the DA is revised twice a year.
In West Bengal, state government employees receive 18% DA, following Chief Minister Mamata Banerjee announcing a 4% hike during her Budget speech this year. In comparison, central government employees receive 55% DA.
The Supreme Court was hearing the state government's appeal against a 2022 Calcutta High Court ruling (The State of West Bengal & Ors. Vs Confederation of State Government Employees, West Bengal & Ors.). The HC had directed West Bengal to bring its DA disbursal in line with central government rates.
An apex court bench comprising Justices Sanjay Karol and Sandeep Mehta has now said the interim relief would apply to DA arrears accumulated between 2009 and 2019. The next hearing in the case is in August. Among other things, the court will consider whether the right to receive Dearness Allowance is a fundamental right.
What is the case?
The legal battle between the state government and its employees began with two leaders of the West Bengal Confederation of State Government Employees, which is affiliated with the Indian National Trade Union Congress (INTUC). In 2016, Malay Mukhopadhyay and Shyamal Kumar Mitra sent a notice to the Chief Secretary, demanding outstanding DA. They later filed a petition with the State Administrative Tribunal (SAT).
'We realised then that the government is not in the mood to pay our outstanding DA, and the courts are the only way to get it. So, we went to the SAT, which gave an order against us. We challenged the order and went to the Calcutta High Court. After that, our journey began, and the West Bengal government has lost every case against us,' said Mukhopadhyay.
On May 20, 2022, the HC directed the West Bengal government to release the DA and corresponding arrears to its employees. A bench of Justices Harish Tandon and Rabindranath Samanta said the allowance should be released within three months.
The order said the arrears were to be calculated based on the All India Consumer Price Index, commensurate with their pay according to the West Bengal Services (Revision of Pay and Allowance) Rules, 2009. The rules provide for DA, medical allowance, house rent allowance and non-practising allowances. They were formulated based on the recommendations of the 5th Pay Commission in 2008.
'Owing to unabated pressure of inflation, the real value of salary fixed periodically by the Pay Commission gets continuously eroded with the passage of time. The cost of price living index is the basic factor for consideration of the Pay Commission for determination of Pay and Dearness Allowances to be paid to the employees. The State Government followed the same principles for computation and payment of D.A on basic pay fixed under 5th Pay Commission as has been done by the Central Government under 6th Central Pay Commission,' the order said.
The Advocate General (arguing for the government) said that the effects of inflation vary from one place to another, and it is not imperative on the part of the state government to adopt the central government rates.
However, the court held that compared to the DA paid to the central government employees, state government employees were lagging far behind. It pointed out that the state government had accepted the pay commission's revisions, and even paid DA twice in a year. This was discontinued after 2010, and the government has since 'delayed payments of DA to its employees in most arbitrary manner'.
The court also said that receiving DA is a legally enforceable right, and the government's argument of 'financial inability' was not acceptable. 'Such right of the employees to sustain their livelihood with dignity has been fructified or elevated as a fundamental right as enshrined in Article 21 of the Constitution,' the ruling noted.
Challenging the order, the state government appealed to the Supreme Court on November 28, 2022, but it saw multiple delays. From December 1, 2024, the hearing was postponed 18 times.
What will be the financial burden on the state government?
A senior finance department official said, 'We already have some rough calculations, indicating the government will have to give Rs 11,000 crore to pay the arrears as ordered by the Supreme Court.'
Existing schemes also add to the government's bill. The Lakshmir Bhandar scheme for financial assistance to women from economically weaker sections costs Rs 25,000 crore. The Banglar Bari housing scheme stands at Rs 40,000 crore. Women-focused schemes, Kanyasree and Lakshmisree, aid for puja committees, and other social security schemes' spending totals more than Rs 10,000 crores.
The 2025-26 state Budget was for Rs 3.89 lakh crore. The revenue deficit estimated for the period is Rs 35,314.95 crore, the fiscal deficit is more than Rs 73,000 crore, and outstanding debt stands at around Rs 7.71 lakh crore.
A government official also pointed out that the debt will likely touch Rs 8 lakh crore this year. 'Last year, we increased the Lakshmir Bhandar monthly payment from Rs 500 to Rs 1000, which increased total expenditure.'
What have the state's political leaders said?
The ruling Trinamool Congress has so far not reacted to the issue. CM Mamata Banerjee said, 'I don't speak about the court cases. I proceed legally.'
Leaders of employees' organisations expressed hope for the order to be implemented. Convenor of Sangrami Joutha Mancha, Bhaskar Ghosh said, 'We want that the Chief Minister should act legally and give us the due DA.' General Secretary of State Steering Committee Sanket Chakraborty said, 'We expect the Chief Minister will obey the order of the apex court and will give us our dues.'
The opposition parties, the BJP, Congress and CPI(M), all said the order had to be implemented and that it came after several attempts by the government to block similar directives.
Atri Mitra is a Special Correspondent of The Indian Express with more than 20 years of experience in reporting from West Bengal, Bihar and the North-East. He has been covering administration and political news for more than ten years and has a keen interest in political development in West Bengal.
Atri holds a Master degree in Economics from Rabindrabharati University and Bachelor's degree from Calcutta University. He is also an alumnus of St. Xavier's, Kolkata and Ramakrishna Mission Asrama, Narendrapur.
He started his career with leading vernacular daily the Anandabazar Patrika, and worked there for more than fifteen years. He worked as Bihar correspondent for more than three years for Anandabazar Patrika. He covered the 2009 Lok Sabha election and 2010 assembly elections. He also worked with News18-Bangla and covered the Bihar Lok Sabha election in 2019. ... Read More