The Union Cabinet approval for the 6% rise in the Dearness Allowance for the Central Government employees is expected to be announced on coming Thursday(02.04.2014)

The Union Cabinet approval for the 6% rise in the Dearness Allowance for the Central Government employees is expected to be announced on coming Thursday. It is a well-known fact that every six months, the Central Government increases the Dearness allowance for its employees during the months of January and July. The increased amount is calculated on the price index (CPI IW BY 2001=100) of essential commodities. Rise in the Dearness allowance is being calculated on the basis of the changes in the prices of the essential commodities during the periods between January and June and the period between July and December.

But, it takes around three months since the release of the price index for the months of June and December to arrive at the calculation for the increase in the Dearness allowance. With the result that the increase due from the month of July is being given only from the month of October and the amount due from January is being given only from the month of April.

And, because of this situation, the amount due for the left-behind period of two months is to be settled as arrears. Practical problems arise in the calculation of the arrears amount and also problem arises in clarifying the doubts of the beneficiaries. Pensioners especially, are more tensed up over this procedure.

To avoid this situation, the price index during the periods from November to April and from May to October can be taken into account and the increase in the Dearness allowance calculated based on the information relevant to these periods. The amount can be disbursed from the months of January and July as per this calculation so that there’s no due as arrears.

We imaginatively tested this method to find out the result. It was found out that there was no tangible change in the increase amount if calculated on the basis of the price index obtained during the months of April and October.