DA deadline ends, Punjab eyes middle path: may pay 6% interest on dues
The development comes after a division bench of the Punjab and Haryana High Court on August 3 dismissed the Punjab government’s appeals against a single judge's April 8 order directing release of pending DA instalments.
With the deadline set by the high court to clear pending Dearness Allowance (DA) ending Monday, the Punjab government is now looking for a “middle path” to resolve the issue, by paying 6 per cent interest on the arrears rather than immediately clearing the dues.
The government has also put on hold implementation of orders passed in cases connected with the DA dispute. On Monday, the Finance Department issued a letter to all administrative departments, directing them to “submit details of cases decided on the basis of the high court’s orders in the Nirmal Singh Dhanoa case and connected matters”.
The letter makes it clear that departments cannot implement such orders on their own. “No such orders may be implemented without prior concurrence of the Finance Department or unless generalised directions are issued, whichever is earlier,” read the communique.
The development comes after a division bench of the Punjab and Haryana High Court on August 3 dismissed the Punjab government’s appeals against a single judge’s April 8 order directing release of pending DA instalments. The Division Bench directed the State and the Punjab State Power Corporation Limited (PSPCL) to release all up to date pending instalments to employees and pensioners at the same rates as applicable to IAS, IPS and IFS officers in Punjab, in accordance with the Central government pattern, within a fortnight. The court further ordered that in case of default, the unpaid amount would carry simple interest at 6 per cent per annum from the expiry of the stipulated period. It directed the Chief Secretary to file a compliance report by August 31. A senior government functionary said the government was now waiting for a meeting of Chief Minister Bhagwant Mann with employees on August 27, where a middle path could be offered to settle the issue.
“The employees will be given a middle path. If the issue is sorted then we will not need to go to the Supreme Court for an appeal,” the functionary said.
The Punjab government had earlier been planning to challenge the high court order in the Supreme Court. Finance Minister Harpal Singh Cheema had said that the government would take a decision after examining the order legally.
Asked about the Finance Department letter, Cheema said there was no need to read more into it. “There has been a lot of confusion. The letter has been issued to ensure that there is uniformity. There is nothing else to read in this letter,” he said.
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The DA dispute relates to the gap between the allowance being paid to Punjab government employees and pensioners and that being paid to All India Service officers and employees of the Centre. Punjab employees have been receiving DA at 42 per cent, while the Centre has moved to 60 per cent. The 18-percentage-point gap has remained a major issue for employee organisations.
The issue goes back to the implementation of the sixth Punjab Pay Commission. The State had accepted the recommendation that DA should follow the central government pattern. The high court, in its April 8 judgment, held that Punjab could not indefinitely withhold the DA instalments on the ground of financial constraints and directed the release of all pending instalments by June 30. The government challenged that order before the Division Bench. The August 3 verdict, however, upheld the basic direction and modified the timeline, giving the government a fortnight to clear the pending DA instalments. The Bench also restrained the state from resorting to unproductive expenditure, including large-scale advertising campaigns, until the dues are cleared..
The financial implications are substantial. The government had previously put the overall liability relating to arrears at around Rs 22,000 crore. The government has argued before the court that its financial position makes an immediate clearance difficult.
Kanchan Vasdev is a Senior Assistant Editor in The Indian Express’ Punjab bureau. She is a highly experienced journalist with 22 years of expertise covering high-stakes politics, governance, and social issues in Northern India.
Professional Background
Role: Primary reporter covering the Punjab Chief Minister’s Office (CMO), government policies, and the Aam Aadmi Party (AAP) leadership in the state.
Experience: She previously worked with The Tribune and has played a key role in launching various city editions.
Special Projects:
Abandoned Brides: Authored a monograph on brides abandoned by NRIs as part of the Prabha Dutt Memorial Fellowship.
Environment: Worked as a Centre for Science and Environment (CSE) fellow, focusing on the pollution levels in the Satluj river.
Recent Notable Articles (Late 2025)
Her recent reporting focuses on the legislative strategies and political maneuvers of the Bhagwant Mann-led Punjab government:
1. Legislative & Governance Standoffs
"Punjab govt advances special Assembly session to pass resolution against VB-G RAM G Bill" (Dec 20, 2025): Reporting on the state's move to block the Centre's "Viksit Bharat" mission, which the state claims will undermine MGNREGA.
"Punjab govt doubles down on special sessions, sixth in January" (Dec 19, 2025): Detailing the AAP government's use of special sessions as a legislative tool amid tensions with the Governor.
"Punjab asks 'VIP teachers' working near Chandigarh to go back to border districts" (Dec 16, 2025): Reporting on CM Mann's move to end the practice of influential teachers avoiding postings in remote areas.
2. Political Analysis & Rural Polls
"Punjab rural polls: Why Akalis are likened to dinosaurs in Punjab" (Dec 19, 2025): Analyzing CM Bhagwant Mann's rhetoric against the Shiromani Akali Dal (SAD) following local body elections.
"AAP claims win in 78% Punjab zila parishads as counting continues" (Dec 18, 2025): Breaking down the results of the 2025 rural elections.
"Rahul Gandhi and Sidhu alike, says Bhagwant Mann" (Dec 13, 2025): Covering the CM's critique of the Congress leadership.
3. Law Enforcement & Bureaucracy
"Suspended Punjab IPS officer Ravjot Kaur Grewal awaits reinstatement" (Dec 10, 2025): Investigative reporting on the bureaucratic red tape involving the Election Commission and the state government.
"Punjab declines to give parole to Amritpal Singh" (Nov 27, 2025): Detailing the state government's refusal to grant parole to the radical preacher and sitting MP.
4. Welfare & Economy
"Punjab government's plan to add more freebies to 'atta-dal' scheme hits funds roadblock" (Dec 4, 2024): An analysis of the fiscal challenges facing the state's flagship food security program.
"Mann leads Punjab delegation to Japan and South Korea for investor outreach" (Dec 2, 2025).
Signature Beat
Kanchan Vasdev is known for her insider access to Punjab's political executive. Her writing provides deep insights into how state policies are formulated and the friction points between the state government and central authorities. Her dual expertise in environment and law allows her to report on complex issues like the "Farmhouse Policy" (Dec 18, 2025) and river pollution with a unique policy-oriented lens.
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