8th Pay Commission: The debate over how dearness allowance (DA) should be determined has intensified even before the Eighth Pay Commission. The All India Defence Employees Federation (AIDEF), an organization representing defense employees, has demanded that the current method of calculating DA be changed, as it is not providing employees with benefits based on actual inflation.
AIDEF has submitted 18 key demands in response to the questionnaire posted on the Eighth Pay Commission’s website. The most important demand is to change the method of calculating DA so that employees receive the correct allowance based on inflation.
How is DA decided now?
The dearness allowance of central government employees is currently decided on the basis of AICPI-IW (All India Consumer Price Index for Industrial Workers). The index is based on the average of the previous 12 months. It is compiled by the Labour Bureau and takes into account the prices of vegetables, fruits, clothing and a basket of essential commodities. On the basis of this index, DA is increased twice every year in January and July.
Why object to the current system?
AIDEF argues that the current AICPI index doesn’t reflect true inflation. They argue that many items in the CPI basket are priced at rationed or subsidized rates, whereas employees and pensioners actually buy goods at open retail prices, which are much more expensive. In such a situation, the DA fixed by the current formula remains less than the actual inflation.
What changes does the union want?
AIDEF has recommended that the DA calculation under the 8th Pay Commission should be based on a new index, either based on actual retail prices in the open market or prices available in government-run cooperative consumer stores. This will make the dearness allowance given to employees and pensioners more realistic.
What are the other major demands related to the Commission?
Fixed term recruitment like Agniveer should be abolished and they should be given regular service.
Dynamic Risk and Readiness Premium should be given in place of Military Service Pay (MSP).
Old Pension Scheme (OPS) should continue for the armed forces.
The annual increment of employees should be increased from 3% to 6%.
The ratio of highest and lowest salary should not be more than 1:10.
At least 5 guaranteed promotions should be given in 30 years of service.
Why is this demand important?
Employee organizations believe that if the DA formula is changed, it could have a significant impact on employees’ salaries and allowances under the 8th Pay Commission. Especially in this era of inflation, a properly determined DA can play a crucial role in increasing the real income of employees and pensioners.
