At present DA is getting ready to touch 80% level. We can expect that it will reach to 100% level near future.
Dearness Allowance Vs Price Rise
The central government employee’s confederation opined that The Dearness allowance which the cg employees are receiving now is not enough to meet the price rise of essential commodities. (see here)
The retail price of those commodities which go into making of minimum wage have risen by about 160% between 1.1.2006 to 2011 in comparison to D.A. compensation, which on the date had been just 51%
The effect of 50% Dearness allowance on our Pay
The sixth pay commission recommended that Whenever the DA reaches 50% level , Some allowances have to be increased by 25 % . Where as in Fifth CPC , it had been recommended when the DA reaches 50 % it should be merged with Basic Pay. It has been implemented with effect from 2004. And the fifth cpc also recommended that the Pay and Allowance should be revised after every five years. But it was not accepted by the Government.
The objectives of increasing Allowances by 25% as per the 6 CPC or merging DA with Basic pay as in the case of 5CPC, when ever DA reaches 50%, is to make the central government employees to balance the financial burden caused by Price Rise through increasing their pay package.
The impact of DA Reaches 100%
According to fifth CPC the 50 % DA had been merged with Basic Pay and in 6CPC , some allowances have been increased by 25%. But 5CPC didn’t say anything about what should be done when DA touch 100% level. Because the govt servants receiving their pay as per pre revised pay were not granted merging of another 50% of DA in 5CPC scale.
7th Pay commission
Even after the rate of DA is increased to 50% level it is not enough to increase some allowance by 25% as it will not help to handle the expenses caused by inflation. So The central government employees are expecting that government should constitute 7th pay commission immediately.