Compensating Government Employees for Price Increase-Basis, Trends and Forecasts

Compensating Government Employees for Price Increase Basis, Trends and Forecasts Poonam Gupta Sanjeev Gupta Does the existing policy of dearness allowance (DA) payments compensate government employees for price increase without introducing distortions in the pay structure? Also, by how much wilt the liability of the govern- ment increase by the turn of the century if present trends in DA payments are maintained? In this paper, the recommendations made by various pay commissions and other bodies on DA since its inception are summarised to bring out the underlying rationale. This is followed by a discussion of the present trends in DA payments. Subsequently, forecast of such payments by the Union government as well as different state governments upto the year 2000 are made. Conclusions are drawn in the last section.