After taking charge, the interim government led by Dr. Muhammad Yunus gave a huge range of promotions to government officials and employees, which raised the revised budget cost. Now they are once again planning to approve government officials' dearness allowance.
If it goes as planned, then within a year budget cost in this section will rise by Tk12,000 to Tk13,000 crore within a year.
In the original budget for the current fiscal year, the allocation for salaries and allowances of government officials and employees was Tk82,990 crore, which is 10.41% of the total budget.
Due to the promotion of employees who were discriminated against during the previous government's tenure, the allocation for this sector has increased to Tk84,000 crore in the revised budget.
Additionally, Tk75 crore has been provided as compensation to 764 officials who retired during the previous administration and were reportedly deprived of promotions.
Seeking anonymity, an official of the Finance Ministry told Dhaka Tribune that budget allocation for salaries and allowances usually increases by 6% to 8% every year. Accordingly, this allocation for FY26 could reach around Tk89,500 crore.
However, if dearness allowance is included, the expenditure could increase to around Tk96,000 crore.
Last December, the government formed a seven-member review committee, convened by the Principal Secretary to the Chief Adviser, to review the provision of Dearness Allowance.
After the review, the committee recommended giving 10% to 20% allowance based on grade.
A maximum of 20% to employees in grades 10 to 20 and 10% to 15% allowance to employees in grades 1 to 9.
According to these initial proposals, granting a 10% allowance to grades 1-9 and 20% to the remainder would incur an extra cost of approximately Tk6,000 crore.
Increasing the allowance for grades 1-9 to 15% while maintaining 20% for the others would raise the total expenditure to around Tk6,500 crore.
However, this plan to implement the allowance was in place since January 2025.
But economists and people criticized this initiative in the current economic crisis. As a result, the government abandoned that decision, which came once again within 5 months before the budget.
Finance Adviser Dr. Salehuddin Ahmed on Tuesday said that the government would consider the issue of providing dearness allowances to the public servants in the next national budget for FY26.
Effect on inflation feared
According to experts and economists, a dearness allowance is an extra sum of money given to offset the impact of inflation on the cost of living.
It is calculated as a percentage of the basic salary.
In a recently published report, the World Bank warned that an additional 3 million people in Bangladesh are expected to fall into extreme poverty in 2025, as the extreme poverty rate is projected to rise from 7.7% to 9.3%.
In this scenario, experts are of the opinion that the great majority of people, many of whom are still living below or close to the poverty line, will experience increased financial strain, even while public employees and their families—a tiny segment of the population—may benefit from better living conditions.
Not only that, these dearness allowance statements, opportunistic dealers, distributors and millers frequently cause a price spike in an attempt to benefit from the situation in an unethical manner.
Dr. Zahid Hussain, a former lead economist of the World Bank's Dhaka office, told Dhaka Tribune earlier: “It is not possible to give an economic explanation for giving dearness allowance. It is not that government employees are working for very low salaries. Since 2015, the salaries of government employees have been in a much better condition than those in the private sector.”
“In the current economic situation, it will be logical to move away from giving dearness allowance,” he added.
