Dearness Allowance

Introduction Gregory committee report Central Bodies Recommandations Types of Dearness Allowance Calculation of D A

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Introduction
Additional Payment To compensate the rise in cost of living WW-I ad hoc payment Bombay, Ahmedabad WW- II: flat rate of 2 annas a day Later raised to 1.75 paise 1946 strike of RMMS 30 rupees minimum wage Implemented in both organised and unorganized sector

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Gregory Committee report (1944)

DA for less than 200 rupees a month Not percentage of actual income Based on consumer price index Regional Decrease with increase in wage One flat rate for all No automatic increase

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Committee on fair wages First pay Commission Second Pay Commission The DA Commission (1967) The NCL Third Pay Commission Bhootalingam committee

Until cost of CPI reduces to 160 to 175 Needed for lower grade, To neutralize prices To protect real income, For abnormal rise of prices Temporary, for lower level employee To preserve purchasing power, Compensation, short term Single corrective wage

Fourth pay Commission

Fifth pay Commission

Twice a year, to decrease with increase in salary

Inclusiveness, comprehensibility and adequacy Parameters Intrinsic job value, skill, drudgery, equity, qualification, power, prestige De link pay from rank Page 4

Types of DA
Flat rate Graduated scale Variable Existing Variations
A Category: flat rate fixed to CPI, flat rate fixed to CPI and pay brackets B Category: Fixed and Variable components of DA C Category: FDA and VDA related to fixed slabs, as Percentage of basic, only VDA related to CPI D Category: for textile industries.

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Calculation of DA
DEARNESS ALLOWANCE CALCULATION BASED ON GAZZETTED NOTIFICATION OF SIXTH PAY COMMISSION All India Consumer Price Index (General) for Industrial Workers (Base 1982=100) Year Jan Feb. March April May June July Aug. Sept. Oct. Nov. Dec. Average (Rounded) 2005, 526, 525, 525, 529, 527, 529, 538, 540, 542, 548, 553, 550, 536* Note:* 536 is taken as a base as on 01.01.2006 for revised DA calculation. It comes to 115.76 when converting in 2001 series after dividing by a linking factor of 4.63 in 1982 series, ( 536/4.63 = 115.76). this figure is given in Gazzeted notification All India Consumer Price Index (General) for Industrial Workers (Base 2001=100) published by labourbureau.nic.in. DA calculation = (Avg AICPI base 2001 - 115.76)*100/115.763 = % DA after rounded off Date 1.7.2006,

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