Sixth CPC Report :(i) Dearness Allowance

The Sixth Central Pay Commission (CPC) has devoted fourth chapter of the report to the subject of Dearness Allowance (DA) payable to government servants. The sanction of Dearness Allowance is at present based on calculated six monthly increase in the All India Consumer Price Index (Industrial Workers) (AICPI-IW) with base year 1982=100. At the time when the scales granted by Fifth CPC came into existence (1st Jan.1996) this index stood at 306.03.

Fifth CPC started with calculation of DA @ 0% . from 1st Jan.1996 . In the month of April 2004 the rate at which DA was admissible had crossed the figure of 50% and therefore based on recommendations of the Fifth CPC 50% DA was merged in the basic pay . This addition to basic pay was known as Dearness Pay. .Thereafter every increase in DA was calculated on (Basic Pay + Dearness Pay). It has been observed that since after the merger of dearness pay with basic pay the base for calculation of increase in AICPI was not changed the neutralization in cost of living was presently being done at a rate higher than 100%.

Commission has pointed out that the present method of calculation for increase in cost of living takes into account the price rise in a group of identified commodities. It has compared the relative merits of “chain based” and “fixed base” methods of calculation of estimated growth in cost of living. The AICPI as stated above is based on the increase in cost of a basket of identified commodities. In the fixed base method the calculations are based on the assumption that consumer would adjust his consumption needs in relation to increase or decrease in prices of the constituent commodities. The chain based method takes into account the possibilities of change in consumption pattern due to availability of wider range of consumption goods and the improvement in the quality thereof due to economic growth. The latter methodology has been considered to be more relevant in today’s economic scenario.

However the basic data for the pattern of consumption in respect of several essential commodities would have to be compiled through a detailed all India survey if this methodology is to be adopted . The previous Pay Commissions had different views on this matter. The Fourth CPC favored evolution of a separate index for calculation of cost of living for the government servants. The Fifth CPC however felt that such index would also suffer from imbalances since consumption patterns of various categories of employees would be different. The Sixth CPC has suggested a sample survey through National Statistical Commission for evolving an index based on consumption pattern of government employees. Till this exercise is completed the present methodology of calculating the increase in cost of living and calculation of DA would continue.


42 thoughts on “Sixth CPC Report :(i) Dearness Allowance

  1. whatever may be the hike in pay, no govt servant will never be content with his salary. the price rise will take everything from your pocket. if you try to cover your head with the blanket then your feet will remain bare and viceversa.

  2. Jobs in the Govt sector / pvt sector cannot be compared on a common scale, it is a matter of individual perception.

  3. Still we the Railway Pensioners are in dark that when the recommendation of 6th cpc shall invoke and how much D.A. will be accepted. And from which date the same shall be introduced.

  4. In accordence to the present political situation,it is presummed that Govt.may redress the discontentment of the railway pensioners'.Pension should hike atleast 40%.presently it is nearly 15%to16%.merger of 50% D.A. only may hike our pension only.

  5. At present DA/DR is allowed ignoring the decimal point i.e. 4.93 4% is allowed. Next increase is 10.63 but allowed only 10% We should insist on the GOVT to sanction 5% and 11% when the decimal point is 50 or more. In otherwords, the DA/DR should be 5% and 11% Like that every increase should be allowed. By ignoring this, the employees and pensioners are put to loss. Can this be taken up?

  6. Hi to all , i am surendar , previously form jan 16 2006 to may 15 2008 i was working in cdac which is under control of ministry, now i resigned the job . i need to know weather i will get the arrears amount for my service during that period as central govenment employee, also i need to know one more thing, from jan 16 2006 to may 1 2007 i served as project engineer in cdac which is consolidated pay of 18000, and from may 1 2007 to may 15 2008 i served as member technical staff where my payscal ranges from 8000-275-12000, pls tell me will i get my arrears. if yes approximately how much i will get.

    16-jan 2006 to 15 jan 2007 Project engineer 18000 consolidated pay
    16-jan 2007 to apr 31 2007 Project engineer 19000 consolidated pay
    may 1 2007 to jan 15 2008 Member technical staff 8275 basic in a1 city (Chennai)
    jan 16 2008 to may 15 2008 Member technical staff 8550 basic in a1 city(Chennai)

    Thanks with regards

    Surendar V


    Dear Readers!

    The Present Percentage of DA is as follows.
    From 1-1-2006- 24%
    From 1-7-2006-29% [5%]
    From 1-1-2007-35% [6%]
    From 1-7-2007-41% [6%]
    From 1-1-2008-47% [6%]
    From 1-7-2008-55% [8%]

    The Proposed Percentage of DA by the 6TH Pay Commission is as follows.
    From 1-1-2006-No DA
    From 1-7-2006-2%
    From 1-1-2007-6% [4%]
    From 1-7-2007-9% [3%]
    From 1-1-2008-12%[3%]

    It can be seen that from 1-7-2006, the Percentage is reduced by 60%,from 1-1-2007 by 33.33%,from 1-7-2007 by 50% and from 1-1-2008 by 50%.It is stated that the Proposed Percentage from 1-7-2008 is 12% [4%]

    At first, the Government propagated that there will be 40 to 50% increase.Then it modified it as 28% increase.Now it says that there will be an average increase of 21%.
    According to the available information, the increase expected will be only around 20%.
    So, the reduction of the Percentage of DA ranging from 33.33% to 60% is wholly unjustified. Justice demands only a reduction of 20% from the existing DA.

    So, the Proposed Percentage of DA on the New Scales of Pay should be as follows.
    From 1-7-2006- 4%, from 1-1-2007-5%, from 1-7-2007-5%, from 1-1-2008-5% and from 1-7-2008- 6.5%. So, the total percentage of DA as on 1-7-2008 should be 25.5% and not 16% as propagated.
    Will the Central Govt look into this and do justice?

  8. Dear Sir/Madam, Date:28-08-08
    As far as the Scientific & Technological services ( R&D professionals) are concerned, in the S&T/ R&D organisations like DRDO and DAE the Recruitment & Promotion system/scheme applicable is Flexible Complementing Scheme (FCS). But in the same departments there are a lot of non R&D posts of engineering and technical in nature covering group A, B and C services. The recruitment & promotion scheme applicable to these S&T posts of non R&D category is the Merit Promotion Scheme (MPS). As per the existing OM of DoPT, the Pay Scales, the residency periods and the designations under FCS should be same and equal in all S&T departments. Thus a Scientist or Engineer under FCS in DOS, DRDO and DAE won't be getting less pay than those in other R&D/ S&T institutions/organisations. But for the MPS they are not so defined. The reservation rules of govt. of India for SCs, STs and OBCs are applicable for even class-I posts under MPS in the departments like DAE, DRDO and DOS. Except these three departments, in all other S&T departments wherein the FCS is in operation the reservation rules are covering the S&T posts upto and including class-I service under FCS. Without FCS a department is not defined under S&T/R&D organisation/ institution. Is my observation correct or not?. Kindly clarify it.
    Thanking You
    Secretary, DOS-SC/ST Employees Welfare Association, Mahendragiri, Thirunelveli District, TamilNadu-627111.

  9. Calculating Avg salary for 10 months has been removed for calculating
    retirement benefits like Gratuity and Encashment of E L but for calculating pension
    benefits the same method is in force.Is it true?

  10. Those who have retired after Dec 2005,may get much less pension than those retiring before Dec 2005 if the avg 10 mths salary method is used for calculating pension.
    For e.g for those with basic pay of Rs.11950 as on1st jan 2006 , increment month also Jan, will be getting a basic pay of Rs.28870. according to the 6th pay comm.Hence pension should work out to Rs.14435.,but it is only per the Calculators provided.If one deducts commuted portion from this amount there willbe a balance of Rs.7594.U may add DA OF 16% on Rs.11114 to this amont and arrive at a fig of Rs.9372.,which is less than Rs.9408. which the person is receiving now.what will
    be left with him if he opts for another commutation which has become due to him
    after basic pay revision .I request ur enlightened susbscribers to give their versions.

  11. respected sir,
    i m a surgical oncology registrar( resident cancer surgeon) at Tata Memorial Hospital, Mumbai( a central govt. institute under DAE) on consolidated pay since last three years.
    Am i entitled for the sixth pay revision scale?

  12. As we are Unit Run Canteen (CSD) employees shall we get the 6th pay commission pay scales, DA etc., Please let me know.

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