Adoption of FG’s Disparity Reduction Allowance (DRA) in the Punjab 2021

The Finance Department Summary of Presentation regarding Adoption of FG’s Disparity Reduction Allowance (DRA) in the Punjab 2021 has been forwarded to the Cabinet for approval. The further detail is given below;

Purpose and Context of FG’s Disparity Reduction Allowance (DRA) 2021

  • Federal Government issued notification for reduction of disparities in the pay of its employees among different Ministries, Attached Departments and other organizations, as well as vis-a-vis the Provincial Governments employees, under the title of Disparity Reduction Allowance @ 25% of the basic pay of Basic Pay Scales, 2017
  • The allowance in the Federal Government is effective from 1st March 2021
  • This Allowance is admissible to Civil Employees in BPS 1-19 of the Federal Government (including employees of the Federal Secretariat and Attached Departments)
  • The said allowance is admissible to only those employees who have not been allowed additional allowance(s) equal to or more than 100% of the basic pay or performance allowance.

Various Financial Benefits and Incentives Introduced in Punjab

  • Punjab Government in the recent past has granted various financial benefits and incentives to its different departments which had created a disparity between pay/allowances of the provincial and federal employees.
  1. Civil Secretariat Allowance as 50% of Running Basic Pay and Utility Allowance for ALL employees in the Secretariat. 50% Additional for CMO and Governor’s Sectt. / House
  2. Revision of Fixed Daily Allowance for Punjab Police employees (Financial Outlay: Rs. 10 bn)
  3. Enhancement in Special Judicial Allowance and Utility Allowance for LHC Establishment and Subordinate Judiciary (Financial Outlay: Rs. 01 bn)
  4. South Punjab Relocation and Secretariat Allowance for ALL South Punjab Secretariat employees
BS-Wise Comparison of Salaries of FG and Punjab After DRA in FG

Applicability of DRA if Adopted in the Punjab

  • If the DRA Notification of the FG is adopted mutatis mutandis in Punjab, following shall be eligible :
  • All those employees who are in receipt of any allowance (s) / special allowance (s) less than 100% of their respective basic pay (No. of Eligible Employees: 7,44,190 approx)

Shall not be eligible for employees in:

  1. Provincial and South Punjab Secretariat
  2. Punjab Police
  3. Doctors
  4. Engineers
  5. District Judiciary
  6. Lahore High Court Establishment
  7. Anti-Corruption Establishment
  8. Special Education
  9. Reclamation and Probation
  10. Punjab Prisons

Implications of Adoption of DRA in Punjab

Punjab has a significantly higher number of eligible employees as compared to Federal Government under DRA

The present demand of the provincial employees involves a huge financial implication and it would have adverse effect on the provincial finances as the current financial year is nearing its close.

The adoption of DRA in Punjab as an adhoc relief allowance alone has an additional budgetary implication of Rs. ~66 bn per annum (Rs. 22 bn for 4 months).
This implication shall significantly increase manifolds in case any pay raise or merger of adhoc allowances is considered in Budget FY 2021-22 for the provincial government employees.

Salary raise proposals may be considered in the Budget for Next Financial Year 2021-22 based on Punjab’s fiscal space as the FG’s DRA notification is not binding on the Provinces

Provincial Cabinet may refer the matter to the Standing Committee of the Cabinet on Finance and Development (SCCFD) for threadbare deliberations on the matter and submit its recommendations to the Provincial Cabinet for its consideration and final approval

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