8th Pay Commission DA calculation: Why defence employee body wants to change the way dearness allowance is decided

The All India Defence Employers’ Federation (AIDEF) is pushing for a change in how dearness allowance (DA) is calculated for the 8^th Pay Commission (8^th CPC). They want to replace the current method, which uses the All India Consumer Price Index for Industrial Workers (AICPI-IW) index, with a more realistic index that reflects the prevailing retail market prices or rates found in government cooperative consumer stores.

This is just one of AIDEF’s 18 demands related to the 8^th Pay Commission, as they respond to the questionnaire available on the 8^th CPC’s official website. Check out what AIDEF is asking from the chairperson of the 8^th CPC, Ranjana Prakash Desai.

How is dearness allowance (DA) calculated for central government employees?

To start, let’s figure out how DA is calculated for central government employees. DA is calculated on the basis of the 12-month average of the AICPI-IW reading. This reading, calculated by the Labour Bureau of the Ministry of Finance, is based on the price of a basket of essential items like vegetables, fruits, clothes, etc.

What did AIDEF find wrong with current AICPI index for DA calculation?

AIDEF points out that the AICPI-IW index currently used for calculating DA does not accurately reflect the real inflation faced by central government employees and pensioners. Many items in the CPI basket are valued at subsidised or ration (Public Distribution System) rates, whereas employees and pensioners buy their goods in the open retail market at significantly higher prices, according to AIDEF.

What did AIDEF suggest for AICPI index?

AIDEF says for 8^th Pay Commission DA calculation, a more realistic index should be based on the prevailing retail market prices or rates in Government Cooperative Consumer Stores.

Other demands of AIDEF related to 8th Pay Commission

End fixed-term employment scheme such as Agnivir

The defence employee organisation suggests that the fixed-term employment for Agniveers in the Armed Forces should be dispensed with and everyone selected and appointed as Agniveers should be regularised.

Military service pay should be replaced with dynamic risk and readiness premium

Military personnel receive Military Service Pay (MSP), which is an extra monthly payment to their salary.

AIDEF argues that Armed Forces personnel deserve pay that reflects their risk readiness, alertness and sacrifices, and the ‘static’ MSP should be replaced with a dynamic risk and readiness premium which should be at least 25% above CAPF/Police and civilian entry levels.

Continue old pension scheme

The defence body believes that the non-contributory Old Pension Scheme should continue for the Armed forces.

Further, AIDEF backs gradual humane changes such as phased increase in retirement age, voluntary retirement with fair compensation and improved reemployment opportunities for the veterans.

Increase annual increment percentage

Central government employees get an annual increment on their salary. As per the 7^th Pay Commission matrix, the annual increment is fixed at 3% for all levels of employees. AIDEF wants it to be 6% annually.

Highest to lowest pay ratio should be 1:10

AIDEF says the ratio of the highest paid and lowest paid employee should not be more than 1:10. In the 7^th Pay Commission, this ratio is nearly 1:14.

Fitment factor

The defence body didn’t come out with any fitment factor but it recommends that the fitment factor should increase real take-home pay, specially for lower and middle ranks, and allowances should be linked to AICPI to protect against inflation.

5 minimum guaranteed promotions

AIDEF argues that in many government departments, regular promotions for Group C and B employees are delayed or not granted in a timely manner. Hence, it has demanded an assured 5 minimum guaranteed promotion in a service span of 30 years in the promotional hierarchy in a time bound manner.