Several employee unions and representative bodies representing central government employees and pensioners have demanded an increase in Dearness Allowance (DA) as a relief measure for employees facing high inflation. With the 8th Central Pay Commission continuing its work towards drafting the report, employee groups expect an increase in DA which would mean higher salaries and increased pensions for millions of employees and retirees across the country.
In April this year, the Modi government announced a 2 percent increase in DA for central government employees and pensioners. With this revision, DA has been increased to 60 percent of basic pay now from the earlier 58 percent.
Demands for increase in DA from prominent employee groups
Several central government employees and pensioners’ representative bodies have demanded an increase in DA as protection against inflation for government employees and pensioners.
The All India Defence Employees Federation (AIDEF), representing defence civilian employees, in its memorandum to the 8th Pay Commission, has sought major revisions in salaries and allowances. It has sought inflation-adjusted compensation demands. The federation has also proposed a minimum basic pay of Rs 69,000 for Level-1 employees.
The Maharashtra Old Pension Organisation placing several major demands before the 8th Pay Commission, has said that the current DA system does not ensure a minimum increase and often falls behind actual inflation. It has asked for a minimum 4 percent increase in each DA revision and to automatically merge DA with basic pay at 50 percent. It also demanded an increase in the minimum wage from the current entry-level basic pay of Rs 18,000 to Rs 65,000
The National Council of the Joint Consultative Machinery (NC-JCM) drafting committee, representing central government employees and pensioners, has recommended that when DA and DR reach 25 percent, it should be merged with the basic pay in the 8th Pay Commission. It has also proposed that the minimum basic pay be increased from Rs 18,000 to Rs 69,000 in the 8th Pay Commission.
Employee unions demand merger of DA with basic
Several employee federations and associations have demanded the government merge 50 percent of DA into basic pay. Employee unions have suggested providing relief to employees as the prices of essential commodities are on the rise. When DA is merged with the basic pay, it will lead to a substantial increase in overall pay and consequently the other dependent allocations.
How DA is calculated
DA is a percentage of the basic salary of an employee that is designed to help lessen the effects of inflation on their living expenses. An increase in DA results in higher take-home pay for employees, offering some relief from inflation.
The government typically announces DA hikes twice a year, once in March for the January-June period and again in September/October for the July-December period.
Dearness Allowance is calculated using the All-India Consumer Price Index for Industrial Workers (AICPI-IW). For central government employees under the 7th Pay Commission, DA is broadly calculated using the formula: DA% = (Average AICPI(12 months)–261.42)/261.42 × 100.
Why is hike in DA and pension demanded?
Employees are demanding a hike in DA and pensions to fight high inflation and account for the delay in the implementation of the 8th CPC. An increase in DA and DR will fight high inflation by protecting the purchasing power of employees and preventing their real income from declining as the cost of living increases. Employees are requesting interim relief in the form of a DA hike as they wait for the implementation of the 8th Pay Commission.
