Understanding Dearness Allowance

Introduced during World War II, the Dearness Allowance (DA) was initially known as ‘Dear Food Allowance.’ It was first provided by the government to employees in response to demands for wage revision. Over time, the DA became linked to the Consumer Price Index (CPI). Various committees within the Central Government have been involved in revising and restructuring the percentage of Dearness Allowance.

In simple terms, dearness allowance is a cost of living adjustment allowance offered by the government to its public sector employees, as well as pensioners. It is an essential component of the salary structure applicable to employees across India.

Calculation of Dearness Allowance

Following the Second World War, Dearness Allowance was established as a standard component of employee compensation by the government. After 2006, the formula for calculating DA was revised. The current calculation methods are as follows:

For Central Government Employees

The Dearness Allowance percentage for Central Government employees is calculated using the following formula:

Where:

• AICPI: All-India Consumer Price Index.

The Dearness Allowance is typically revised on a biannual basis, effective from January 1st and July 1st each year. This revision aims to compensate for the rise in prices or inflation within a specific financial year, a practice in place since January 1, 1996.

DA Rates for Odisha Government Employees (7th Pay Commission Onwards)

DA Rates for Odisha Government Employees (Pre-7th Pay Commission)