Central Government employees losing interest in Dearness Allowance?

It is becoming very obvious these days that the Central Government employees and pensioners are fast losing interest in Dearness Allowance.

Dearness Allowance is given to the Central Government employees once every six months, in order to help them maintain their lifestyle against the rising prices. Fluctuations in the prices of 392 essential items are recorded regularly at 78 various locations and their data is tabulated once every month to calculate the All India Consumer Price Index Number (AICPIN), which is then released by the Centre. Dearness Allowance is thus calculated.

For ten years now, we have been calculating the Dearness Allowance in advance and releasing the numbers. This is why we are able to sense an acute loss of interest among the Central Government employees in recent times to know their next and expected Dearness Allowance.

Dearness Allowance is calculated with the employee’s basic salary. For example, a 7 percent Dearness Allowance for an employee who draws a basic salary of Rs.18000 per month, will translate into Rs. 1260.

All the Central Government employees, defence personnel and pensioners are now being paid as per the recommendations of the Seventh Pay Commission, from January 2016 onwards. The Seventh Pay Commission had recommended that no changes shall be made in the Dearness Allowance calculations and the method adopted by the Sixth Pay Commission continues to be followed. The centre too had accepted the recommendations.

Under the Sixth Pay Commission method, the Dearness Allowance had increased by 125 percent in the past ten years, from January 2006 to December 2015. It is worth mentioning that at least thrice, a Dearness Allowance of 10 percent was paid to the employees. The table below shows the Dearness Allowance that was paid once every six months.

The loss of interest among the employees probably has something to do with the fact that the increase in Dearness Allowance has only been marginal ever since the Seventh Pay Commission was implemented.

There was no Dearness Allowance for the first six months, January to June 2016. Dearness Allowance of only 2 percent was given for July to December 2016. It looked as if something was wrong with the calculations, right from the start, but the employees thought that things will improve with time. The Dearness Allowance for January to June 2017 was a mere one percent, which came as a rude shock to all. And then, Jul to Dec 2017 is 5% and Jan to Jun 2018 is being fixed as 7% as per the calculations.

The centre claimed that it was because they have the prices under control.

So, what is the Dearness Allowance for the second term of 2018, July to December 2018, likely to be?

This time too, it is not expected to exceed 3 percent.

We expect the Dearness Allowance to be 9% or 10% with effect from July 2018.