DA Calculation for Central Government Employees: The Confederation of Central Government Employees and Workers has urged the Centre to consider revising the computation formula for dearness allowance for central staff and pensioners.
In a letter addressed to the Union cabinet secretary, S B Yadav, secretary general of the confederation – representing about 7 lakh employees working in various central government departments – suggested improvements in the computation of dearness allowance (DA) and Dearness Relief (DR) for the employees and retirees, respectively.
Confederation suggests a new formula to calculate DA for government employees
The letter highlighted the disparity in the DA calculation method for government employees working in different departments. The formula used for DA calculation for the employees working in public sector units, including PSU banks, is different than the one used for other central government departments.
The confederation suggested that the average of 12 months should be replaced by a three-month average, which means variable DA should be given so that the employees get compensated by the actual price rise every three months, as in public sector employees and bank employees.
DA calculation formulas for PSU employees and other central government staff
For central government employees:
DA = { (Average of AICPI (Base year 2016=100) for the last 12 months – 115.76)/115.76 } x 100
For public sector employees:
DA = { (Average of AICPI (Base year 2001=100) for the last 3 months – 126.33)/126.33 } x 100
Stressing the need to bring parity in the calculation method, the letter said the DA of banking employees is revised every quarter, i.e., Feb-April, May-July, August-October, and November-Jan every year.
Highlighting this alleged discrepancy, the employees’ representative body said if a price rise is taking place in January, it is compensated partially after 12 months. “The DA should be calculated and paid every three months instead of six months.”
It has suggested that ‘point to point DA’ should be provided. “Now the DA is rounded off to lowest value if we are eligible for 42.90% DA, we are sanctioned only 42% DA, the 0.9% DA is being deprived” to the central government employees for six months, the confederation said, adding that “the point-to-point DA should be provided to us as in the case of banks and LIC employees get the DA even point to point DA.”
A separate consumer index needed for central government employees and pensioners
The number of items used for the calculation of the Consumer Price Index is 465 after the new series 2016 was adopted by the government. “As many of these items are not used by the central government employees in day-to-day life, it neutralises the effect of the price rise of the actual items used by the central government employees and pensioners; we are getting less dearness allowance than the actual price rise happening. Hence there is a need to construct a separate consumer index for the central government employees and pensioners.”
Also read: 8th Pay Commission: Central govt employees’ DA may be reset to ZERO from this date! Know why
Recommendation of 6th CPC
The 6th Central Pay Commission (CPC) is of the view that the National Statistical Commission may be asked to explore the possibility of a specific survey covering government employees exclusively, to construct a consumption basket representative of government employees and formulate a separate index. Meanwhile, the government may continue to use the AICPI (IW) for estimating the DA, the confederation said in its letter.
Separate DA/AICPI should be formed for government employees
The Labour Bureau, which is an attached office of the Ministry of Labour and Employment, has been compiling the Consumer Price Index for Industrial Workers every month on the basis of retail prices collected from 317 markets spread over 88 industrial centres in the country.
The index is compiled for 88 industrially important centres, and the All India Consumer Price Index is released on the last working day of the succeeding month by the Ministry of Labour & Employment, Labour Bureau Chandigarh, on the last day of the month on which the DA is calculated every six months.
“The Consumer Price Index for Industrial Workers maintained by the Labour Bureau, Shimla, and the retail prices are showing different retail rates; the retail prices of essential commodities are at a higher end, including those of state government-run cooperative societies, compared to the retail prices maintained by the Labour Bureau, Shimla, not on prevailing market retail rates; the net difference of the price of commodities varies up to 30%,” the letter said.
Also read: Govt to improve CGHS services, revise rates? Central employees’ wishlist for Budget 2025
Therefore, the central government employees and pensioners are deprived of a proper Consumer Price Index as retail prices maintained by the Labour Bureau, Shimla are adopting lower prices, it alleged. The DA and DR are based on the Consumer Price Index (CPI) points.
Against this backdrop, a proper methodology shall be adopted to arrive at the retail prices of the items, which leads to the construction of the Consumer Price Index, the confederation demanded.