Dearness Allowance
One particular feature of the wage structure in Indian industry is the importance of schemes of dearness allowance, which were started during the First World War, but have acquired much greater prominence after the Second World War. There is an increasing tendency during recent years to link dearness allowance with the cost of living index, the extent of neutralization varying with the circumstances of each case.
Dearness AllowanceWhat Is Dearness Allowance?
The Dearness Allowance (DA) is a calculation on inflation and allowance paid to employees, worker and pensioners in India.
Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people. Indian citizens may receive a basic salary or pension that is then supplemented by a housing or a dearness allowance, or both. The guidelines that govern the dearness allowance (DA) vary according to where an individual is deployed.
However, if the case of dearness allowance schemes, as in case of wage structure as a whole, where more than the minimum wage is fixed, the tribunals have given due importance to the financial capacity of the employer, always keeping in mind that, where permissible, the workmen should be provided relief against the rise in cost of living particularly in the lower income brackets.
Dearness allowance depends upon the place of deployment of an employee. In view of the Supreme Court, all categories of staff getting the same wages and posted at one place should be given the same scale of dearness allowance irrespective of the fact that they are working as clerks or members subordinate staff or factory workmen.
It was further said that the pressure of high prices is the same on various categories of employees and the subordinate staff and factory workmen these days are as keen to educate their children as clerical staff
Refer -
- Standard Vacuum Refinery Company of India Ltd. v. Workmen (1%1) ILLJ 227. 62. Ahmedabad Millowners Association and Others v. Textile Labour Association Ahmedabad (1966) I LLJ I: AIR 1966 SC 497.
- Transport Corporation of India Ltd. v. State of Maharastra & Ors. (1993) II LLJ 365 (Bom.)
- For a full statement of law regarding principles of fixation of dearness allowance, see the judgment of Supreme Court in
- Killick Nixon Ltd. v. Killik and Allied Companies Employees Union (1975) Π LLJ 53: AIR 1975 SC 1778. 65.
- Indian General Navigation and Railway Co. Ltd Calcutta v. Thar Workmen AIR 1960 SC 219.
- Greaves Cotton and Co.Ltd v. Their Workmen AIR 1964 SC 689. 67. Ibid
How Dearness Allowances is calculated?
Formula for calculating
- Dearness Allowance for Central government employees after 1.1.2006 is : Dearness Allowance %= {(Average of AICPI(Base year 2001=100) for the past 12 months – 115.77)/115.77}*100
- Dearness Allowance for Central public sector employees after 1.1.2007 is : Dearness Allowance %= {(Average of AICPI(Base year 2001=100) for the past 3 months - 126.33)/126.33}*100
Beginning 1 January 1996, the Dearness Allowance is granted to compensate for price increases to which the revised pay scales relate. This will be reviewed twice a year, on 1 January and 1 July.
All India Consumer Price Index for Agricultural & Rural Labour
The following table shows All India Consumer Price Index since 1.1.2006 with Base year 2001=100
- The index numbers with base 1982=100 can be obtained by multiplying the above values with the link factor of 4.63.
- The All-India CPI-IW remained stationary for January 2020 at 330 (three hundred and thirty)
- The index showed no change between December 2019 and January 2020 when compared with the increase of (+) 1.99% between December 2018 and January 2019.
- The maximum upward pressure to the change in current index came from Housing group contributing (+) 2.38% points to the total change which was offset by food group with a negative contribution of 2.15 percentage points to total change.
- Year-on-year inflation based on all-items stood at 7.49% for January, 2020 as compared to 9.63% for the previous month and 6.60 per cent during the corresponding month of the previous year. Similarly, food inflation stood at 10.61% against 12.22% of the previous month and 0.97 per cent during the corresponding month an year ago.
Notification - All India Consumer Price Index for Agricultural & Rural Labour
Dearness Allowances for Print Media
Dearness Allowances for print media workers the Government of India has notified a Dearness Allowance Formula is provided in the Gazette No 2532(E) dated Nov 11, 2011, as recommended by the Majithia Wage Board for Journalists and Non-Journalists. The said Gazette notified formula was subsequently upheld by the Supreme Court of India by its judgment made on Feb 7, 2014. The Hon'ble Supreme Court upheld the recommendations as 'revised and determined' by Hon'ble Justice (retd) Majithia. While 115.76 is the Base and Divisor for Central Government staff, for employees coming under Majithia Wage Board 167 had been recommended as Base and Divisor. The said 167 is the 12-month average of July 1, 2009 to June 30, 2010.
The average for the current Dearness Allowances period January to December 2017 is 274, which is the 12-month average AICPI-IW of Jan 1, 2016 to December 31, 2016. The DA calculation for Jan 2017 to June 2017 is 274 minus 167 * Basic Pay and the result divided by 167. Total points 107.
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