The Punjab government has announced an 8% Dearness Allowance (DA) increase for government employees and pensioners following a meeting between Chief Minister Bhagwant Mann and representatives of employee organisations in Chandigarh on Friday and the meeting was held amid an ongoing dispute over pending DA installments and arrears. Employee and pensioner organisations have been demanding the release of their outstanding dues, while the state government has maintained that clearing the entire amount at once would put a major financial burden on the state.
Finance Minister Harpal Singh Cheema, AAP Punjab president and Cabinet Minister Aman Arora, and Cabinet Minister Dr Baljit Kaur were also present during Friday's meeting. Twelve representatives from different employee and pensioner organisations were invited, including the Sanjha Front of Pensioners, Sanyukt Mulazim Manch, Punjab Secretariat Association and Punjab Civil Secretariat Officers Association (Retd.).
Punjab government employees and pensioners have been seeking payment of pending DA and Dearness Relief (DR) installments along with arrears and the dispute is linked to the recommendations of the 6th Punjab Pay Commission, which supported continuing DA payments according to the Central Government pattern.
The Punjab government subsequently issued several orders revising DA rates after 2021, however, employees and pensioners have continued to demand payment of pending installments and arrears.
On August 3, 2024, a division bench of the High Court dismissed appeals filed by the Punjab government and PSPCL and directed the authorities to release pending DA/DR installments according to the Central Government pattern.
The court had directed that the pending installments be released within 15 days and it also ordered that if the payment was not made within the stipulated period, simple interest of 6% per annum would be payable on the outstanding amount from the expiry of the deadline until the payment was made.
The Punjab government challenged the High Court's order in the Supreme Court, arguing that releasing such a large amount within a short period was not financially and constitutionally feasible.
The state also argued that the Punjab Pay Rules, 2021, do not prescribe a specific Central Government rate or formula for DA. According to the government's position, the state has the authority to decide the DA rate and the High Court, however, had noted in its August 3 judgment that the 6th Punjab Pay Commission had recommended continuing DA according to the central pattern and that the state government had accepted the recommendation.
The court also referred to subsequent DA orders issued by the state, including rates of 28%, 34%, 38% and 42%.
The Punjab government filed a Special Leave Petition (SLP) in the Supreme Court on September 1, 2026, challenging the High Court's August 3 order and seeking a stay.
The Supreme Court Registry raised nine technical objections to the state's petition and on September 11, the Punjab and Haryana High Court gave the state 10 days to rectify the objections and proceed with its Supreme Court challenge. The High Court also made it clear that its earlier order should not be halted and directed that if the state did not initiate proceedings in the Supreme Court within the given period, the High Court would resume proceedings concerning non-compliance, and as of now, the Supreme Court has not stayed the High Court's order, and the hearing on the matter has not commenced there.
The state government has also informed the court that around ₹6,000 crore has already been disbursed under the liquidation process and according to the government, payments to pensioners across different age groups and other outstanding dues are being cleared in phases.
The government has maintained that the entire outstanding amount cannot simply be released at once because the state has several other financial obligations, including salaries, pensions, interest payments and debt servicing, employees' organisations, however, have claimed that the state's tax revenue has increased significantly and that around ₹14,200 crore in outstanding dues can be paid.
The DA issue had led to a state-wide agitation by government employees and pensioners during August and September. On September 8, the Punjab government issued a 'No Work, No Pay' order for employees who remained absent from duty during the protests and despite the order, employee organisations continued their agitation. Their representatives later met Chief Secretary KAP Sinha, following which a meeting with Chief Minister Bhagwant Mann was arranged.
Friday's meeting in Chandigarh has now resulted in the announcement of an 8% DA increase, even as the broader dispute over pending installments, arrears and implementation of the High Court's directions continues.