8th Pay Commission: New price index for dearness allowance calculation on pensioners’ wishlist

A pensioners' body has suggested that the 8th Central Pay Commission (CPC) should consider a new government-specific index for dearness allowance (DA) calculation, saying earlier commissions have observed inconsistencies in the current method.

Dearness Allowance is paid to Central Government employees to adjust the cost of living and to protect their Basic Pay from erosion in the real value on account of inflation.

At present, DA hike is calculated as per the AICPI-IW-based formula accepted by the 7th Pay Commission.

In its feedback to the 8th CPC, the RSCWS said, "The recommendation of the 6th CPC for a separate consumption basket for Government employees deserves reconsideration."

"DA is based on the All-India Consumer Price Index (Industrial Workers). Every Pay Commission observed some inconsistences in the method of computing dearness allowance. 6th CPC looked into the weightages assigned to various components of consumption and the manner in which the Labor Bureau conducts the survey," it added.

The RSCWS suggested three specific points with regard to DA for consideration by the 8th CPC:

• Consider a government-specific price index.

• Follow the principle of 50% DA merger with basic pay/pension as recommended by the 5th CPC.

• Ensure 100% neutralization for pensioners at all levels.

The RSCWS gave the above feedback in response to the following query in the 8th CPC questionnaire: