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DA Details

The document discusses the methodology used to calculate Dearness Allowance (DA) for government employees in India. It notes that DA is provided to compensate for rising commodity prices. Currently, DA is estimated based on movements in the All India Consumer Price Index (AICPI). The Sixth Central Pay Commission recommended revising the base year for the existing fixed base index method as frequently as feasible and exploring the potential to develop a chain-based index if time series consumption data becomes available.

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359 views

DA Details

The document discusses the methodology used to calculate Dearness Allowance (DA) for government employees in India. It notes that DA is provided to compensate for rising commodity prices. Currently, DA is estimated based on movements in the All India Consumer Price Index (AICPI). The Sixth Central Pay Commission recommended revising the base year for the existing fixed base index method as frequently as feasible and exploring the potential to develop a chain-based index if time series consumption data becomes available.

Uploaded by

gcrajasekaran
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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DA

. DA .
..

 What is the need for providing D.A. ?


 The basic reason which lies behind the provision of D.A. is to compensate the
price rise against various commodities . It is eligible for all the government
employees
 What is the previous methodology used to calculate DA ?
 The Fifth Central Pay Commission recommended uniform neutralization of DA
at 100% to employees at all levels;

conversion of DA into Dearness Pay each time the CPI increases by 50% over
the base index with Dearness Pay counting for all purposes including retirement
benefits; and Dearness Allowance including Dearness Pay being paid net of tax.

The Commission did not favor the option of employing separate indices for each
category of employee because of the sheer impracticality of the task
and,therefore, recommended using the 12 monthly average of All India CPI (IW)
with base 1982 for calculating DA

 What is the existing methodology used to calculate DA ?


 Presently, the estimation of DA for Central Government Employees is based
on the movements in the AICPI (All India ConsumerPrice index)
(IW)(1982=100).

 What are the recommendations made in 6th central pay commission ?

Recommendation on chain base index

The feasibility of developing a Chain based index is dependent on the


availability of time series data on both prices and the corresponding quantities
demanded of each item. While there is merit in developing a chain based index
for capturing inflation, this would be feasible only if the Consumer Expenditure
Survey generates time series data, on both quantity consumed as well as value
of expenditure for fairly large list of items in the consumption basket providing the
possibility of substitution over short time span. The Government may explore this
possibility. In the meantime, the Government should keep revising the base year
in the existing fixed base index method as frequently as feasible

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