8th Pay Commission: Confederation Of Central Government Employees Suggests Centre To Revise DA Calculation Formula

The Confederation of Central Government Employees and Workers has suggested the revision of the formula used for calculating the dearness allowance. The dearness allowance is paid to both current central government employees and retired central government employees.

The demand was raised through a letter addressed to the Cabinet Secretary. The letter was written by the Secretary General of the confederation, S.B. Yadav. The letter has been written following Centre’s announcement related to the setting up of the 8th Pay Commission.

What The Confederation Is Suggesting

The Confederation of Central Government Employees and Workers which represents nearly 7 lakh Central Government employees across various departments has suggested that the Centre should revise the calculation for computation of both Dearness Allowance and Dearness Relief.

The DA formula used currently is:

For Central Government Employees:

DA = { (Average of All India Consumer Price Index

(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

For bank employees is:

DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 3 months – 126.33)/126.33] x 100

The confederation has urged the Centre to replace the average of 12 months used for the computation of DA with a three-month average. The confederation has argued that revising the DA on the basis of a three-month average can help central government employees get a salary that is in line with the price rise which takes place every three months.

Frequent Revision Of DA

The confederation also said in the letter that the DA of banking employees is revised every quarter, Feb-April, May-July, August-October and November-Jan. The federation suggested that the DA should be calculated and paid every three months instead of six months.

Point-To-Point DA

The federation also said that point-to-point DA should be provided. The letter stated that presently the DA is rounded off to the lowest value. If the DA percentage is 42.90 per cent the DA that is sanctioned is only 42 per cent. Currently point-to-point DA is provided to public sector bank and LIC employees.

Separate Consumer Index

Among the other key suggestions made by the confederation was that a separate consumer index should be made for central government employees and pensioners.

The confederation said that the items used for the calculation of the Consumer Price Index comprise 465 items. However many of these items are not used by the central government employees in day-to-day life, thus the inclusion of these items neutralises the effect of the price rise of the actual items used by the central government employees and pensioners. This in turn results in less dearness allowance for central government employees as per the letter.

The Federation also urged the National Statistical Commission 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.

The Labour Bureau, which is an attached office of the M/O Labour & Employment, has been compiling the Consumer Price Index for Industrial workers every month. The Consumer Price Index is released on the last working day of the succeeding month by the Ministry.

The confederation claimed that the Consumer Price Index for Industrial Workers maintained by the Labour Bureau, Shimla and the retail prices show different retail rates with the difference going up to 30 per cent for some commodities.

“The retail prices of essential commodities are on the higher end including that of state Government co-operative societies compared to the retail prices maintained by the Labour Bureau, Shimla. The retail prices are higher in other Central Government Departments, compared to the Labour Bureau, Shimla such as the Directorate of Economics & Statistics prices which is also a Central Government Department,” the confederation said.

The confederation suggested that a proper methodology should be adopted for arriving at the retail prices of the items, which leads to the construction of the Consumer Price Index (CPI).

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