As it is clear from the dearness allowance meaning, Dearness Allowance is very dear to the government and public sector employees and pensioners. In India, there are around 47.68 lakhs of central government employees and 68.62 pensioners who get DA along with their basic salary or part of pension respectively and this allowance is one of the most crucial portions of their salary structure. It will also be a relief to family pensioners, i.e. pension provided to the family of an erstwhile central government employee who died during service tenure. The Pay Commission of India has recently made some changes to these structures and the same has affected the employee’s and pensioners’ finances. This article will find out the effect of such changes, details about the whole process & meaning of dearness allowance.
What is a Pay Commission in India?
A Pay commission can be referred to as an organization that evaluates and scrutinizes the payment structure of salaries, perks, allowances, and facilities provided to the employees of government organizations and also in military services.
As per dearness allowance meaning, Dearness allowance is a part of review under the Pay commission and it decides whether to increase, decrease or keep the same rate for Dearness Allowance. If you are wondering what DA is then Dearness Allowance meaning in short form is DA. It is offered to all the central government employees and pensioners.
Pay commission thus decides about the pension schemes and other related benefits and perks offered to these employees. They evaluate the job operations, qualifications, performance, and other factors to decide how much salary, dearness allowance, and other facilities should be given to the employees of different departments under the government and public sector companies and military forces.
Pay commission changes salary structure, dearness allowance, and other facilities as per their evaluation from time to time. They not only assess the performance, productivity, and job details but also evaluate the economic conditions to determine the salary, dearness allowance, and other perks. Pay commission also has to look at the available resources of the country and the economic scenario to decide on the DA especially.
After every ten years, a new pay commission is formed to restructure salaries. However, DA is evaluated and revised after every 3 or 6 months depending on whether it is IDA or VDA respectively. The first pay commission was established in the year 1946 and since then, there have been 7 pay commissions formed till date.
7th Pay commission
At present, the 7th Pay commission is at work. It was set up on the 28th of February, 2014 in India by the government. It is the 7th central Pay Commission (CPC) of India which is headed by Justice Ashok Kumar Mathur.
What are the objectives of the 7th Pay Commission?
To understand the changes made to Dearness Allowance you need to understand the objectives of the 7th pay commission as well. The primary objectives of the 7th Pay Commission of India are –
- Long-term fiscal sustainability by developing skilled human resources and motivating them
- Hiring more people to increase employment in the country
- To become a model employer by providing exemplary salaries and allowances and intangible benefits is also being considered.
In this pay commission, the minimum pay for employees/ staff of the central government had been fixed at Rs. 18000 per month and Rs. 225000 per month and Rs. 250000 per month for Apex scale and Cabinet secretary respectively, also includes other designations at the same pay level. Furthermore, the commission decided the level of increment to be 3% annually.
How has the 7th Pay commission affected the DA?
Now, you know how the pay commission works and how it is structured and changed after a thorough evaluation of the salaries and allowances. Dearness allowance helps fight the increasing cost of living, increasing prices of goods and services, or in short, it helps in beating inflation.
7th Pay commission recently increased the Dearness allowance from 31% to 34%, effective from 1st January 2022. This increase of 3% in DA will help the employees have more salary in hand. This will also ease the life of the employees amidst the rise in fuel prices and all time high inflation in India.
During the lockdown due to the pandemic, the pay commission didn’t change or increase the Dearness allowance however the inflation increased to around 6% and above. This left many with limited cash and decreased their purchasing power as the prices of goods and services were increasing.
During the lockdown, it was more difficult, as the prices of goods and services were increasing every day, and the government employees didn’t get an increment in the dearness allowance which helps in fighting the rising prices. Increasing the dearness allowance means more money in the hands of the employees. This in turn increases the demand for products and generates revenue for the economy.
The 7th pay commission closely monitors the salary, inflation, and CPI index and after thorough inspection and analysis, it adjusts the DA accordingly. However, the last revision of the Dearness Allowance was effective from 1-July-2021 where the basic pay of the central government employees had increased from 28% to 31%. It was revised by the Union Cabinet in October as a Diwali Gift, where the basic pay has been revised as per the matrix of the 7th Pay Commission and does not include additional allowances such as special pay, etc.
This hike in the Dearness Allowance will be applicable even to employees of the Defence Services, Railways as well as Armed Forces and the Navy.
It seems that the Dearness Allowance (DA) rise along with the rise of Dearness Relief (DR) had been stalled over the last 1.5 years due to countrywide lockdown and Coronavirus Pandemic. Usually the Dearness Allowance is revised twice a year, in January and in July every year.
Conclusion
For central government employees,meaning of dearness allowance is very crucial. As usual, the government payment structure is lower than the private sector, moreover, there are no incentive schemes as such. Thus, to cope up with rising inflation every year, the government offers DA which is decided by the Pay Commission. Thus, you must know about dearness allowance meaning and all the factors associated with it.
