As per a report, the central government is set to modify the index and base year that is used for calculating dearness allowance. This modification will lead to an increase in the salary of central government employees and pensioners. The move will impact about11 Mn employees and pensioners.
Reportedly, the base year of the new CPI-IW could be 2016. Also, the labor ministry has proposed that the base should be revised every six years to capture the changes in living expenses more quickly. Currently, the base year for calculating CPI-IW is 2001.
The last revision in the base year was made in 2006 by the Sixth Central Pay Commission and changed to 2001 from 1982.
It is also being said that the proposed index will include the addition of new industrial centers to increase the scope of elements the price includes, taking the total number of industrial centers under consideration to 88 as compared to 78 now. Additionally, various new items are being added to the list, including cars and mobiles, to cover the change in lifestyle of industrial workers over the last 15 years.
Before the index gets finalized the proposal will go through various steps. Firstly, the new index will soon go to the technical advisory committee for vetting. And then it will go to the national tripartite consultation
This revision in the Dearness Allowance is not new. It was not a long ago in March this year that, the Union Cabinet increased DA to 7 percent from 5 percent effective January 2018. The revision done in March was based on the recommendations of the 7th Pay Commission and had benefitted 48.41 lakh central government employees and 61.17 lakh, pensioners. Now, with the latest revision in Dearness Allowance, central staff can witness further increase in their compensation.
(DA is a cost of living adjustment allowance paid to government employees, public sector employees and pensioners in the country. It is calculated as a percentage of an employee’s basic salary to mitigate the impact of inflation on people.)