The Government has decided to abort the disbursal of the Dearness Allowance (DA) benefits for the Central Government employees and pensioners due to the cash crunch over COVID-19. The April salary will be due within a week’s time along with the revised Dearness Allowance. However, the salary will not carry an enhanced Dearness Allowance of over 21 percent.

The COVID-19 has created huge havoc among the economic front of the country. With the announcement of the lockdown, the business has come to an utter standstill. Hence, Tax revenues have declined considerably. The DA pause is for one year with the possibility to provide all the arrears after that.

The main reason for the suspension of Dearness Allowance benefits is due to the steep decline in the overall tax revenues. The Government has decided to delay the implementation of the recent decision to raise DA for 1.13 crore employees and pensioners.

The Cabinet gave its approval to increase the Dearness Allowance by 21 percent from the previous 4 percent on March 13 with retrospective effect from January 1, 2020. The estimated cost of the DA payment amounts to Rs 14510 crore in FY21. The employees and pensioners were supposed to receive DA arrears from January to March in April. The interesting point to note is that the DA changes haven’t yet notified, which created a rumor about the imminent suspension of DA.

The Government also announced a series of cost-cutting measures, which include slashing of the Budget allocation of departments by 40 percent. The Government also asked its staff to donate one day’s pay in April towards the PM-CARES fund voluntarily.

India’s Yes Bank is under deep trouble. The company is facing a huge crisis and the Reserve Bank of India (RBI) has capped the withdrawal limit to Rs 50000. However, the cap can be relaxed for emergency situations. The RBI has placed Yes Bank under moratorium for a period of one month. The bank will be controlled by an RBI appointed administrator after one month. Hence, digital payment services companies like PhonePe could not operate from Thursday evening.

The RBI has superseded the Yes Bank board because of the serious problems with the bank financials. The PhonePe could not operate because the service makes use of the Yes Bank for the transactions. Moreover, the net banking facility of the Yes Bank is not working since Thursday evening. In addition to PhonePe, Flipkart, Myntra, Swiggy are unable to use Yes Bank UPI.

Commenting on the development, PhonePe CEO Sameer Nigam disclosed that the company sincerely regrets the long outage. Their partner bank Yes Bank was placed under moratorium by RBI. The team has been working all night to get the services restored at the earliest. PhonePe depends upon Yes Bank for the transactions.

The company will find it difficult to operate if the RBI continues the moratorium. Moreover, PhonePe’s money has been struck inside their bank account. Even if PhonePe continues to operate by switching over to another bank, they will be able to recover the locked amount only after several months.

Going forward, the popular private bank in India will not be able to grant or renew any loan or advance. They can’t make any investment or incur any liability. The bank will be managed by the RBI-appointed administrator Prashant Kumar, who previously worked with SBI. That said, you need not have to panic because RBI has taken a decision before the bank collapses. The reports indicate that RBI is currently looking for an infusion of equity and revival of the bank.

It seems that the economy is not in good shape worldwide. Thomas Cook UK has closed its operation since the company was unable to garner the required funds from investors for the continuation. However, Thomas Cook India has disclosed that their operations will not be affected in any manner since they are part of a different entity.

The last-minute talks failed and the 178-year old Thomas Cook UK has cancelled over 600,000 bookings. There are reports that as many as 1.5 million British tourists are left stranded at various destinations across the country. The collapse of Thomas Cook UK has caused 22000 job losses including 9000 in the UK. The company took to Twitter and revealed that they won’t be monitoring the account and have ceased to exist.

The closure of Thomas Cook UK won’t affect Thomas Cook India operations in any manner. THis is because Thomas Cook India was acquired by Fairfax Financial Holdings with a 77 percent stake in 2012. It is to be noted that Thomas Cook UK doesn’t have any stake in the Indian entity. The new turned out to be a sigh of relief for not only travellers but also staffs.

Commenting on the development, Madhavan Menon, Chairman and Managing Director of Thomas Cook India revealed that the company was acquired by FairFax Holdings in 2012. The balance sheet is separate from Thomas Cook Uk and very sound. The developments happened in the UK is specific to that country and the operations of India are not affected in any manner.

After the transfer of the entire stake to FairFax, Thomas Cook India has no business to do with its UK counterpart. The India operations are being carried out as a separate entity. The Indian operations are not affected in any manner.

The Government will have a sigh of relief since the abrupt forced closure of Thomas Cook India will have a hard impact on the economy. The closure of Jet airways had triggered panic with no other company coming forward to take over the assets.

Thomas Cook India provides a wide range of services ranging from foreign exchange, insurance, passport, corporate travel including visa services. The company operates B2C and B2B brands and companies across 29 countries.

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