Why Defence Employees Want a New DA Formula for the 8th Pay Commission

The All India Defence Employees’ Federation (AIDEF) has submitted a second memorandum to the 8th Pay Commission panel, arguing that the current formula for calculating dearness allowance (DA) does not reflect the actual cost of living for central government employees and pensioners.

Under the 7th Pay Commission's recommendations, DA and dearness relief (DR) are computed using the 12-month average of the All-India Consumer Price Index for Industrial Workers (AICPI-IW). The federation says this approach understates inflation's bite on household budgets.

AIDEF's core argument is that the index assigns higher weight to relatively stable expenditure categories, making it "difficult for the index to adequately and fairly represent the current inflation picture." Employees on lower pay grades spend a larger share of their income on food, education, healthcare, housing rent, and medicines. For pensioners, the federation noted that spending on caregiving, health, and medical expenses tends to rise faster than overall CPI inflation, meaning periodic DR revisions may not protect their purchasing power.

Food and beverage account for only 36.75% of the total index. Categories like healthcare, housing, transport, communication, and digital services have received greater weightage, despite experiencing more enduring price movements. The federation also said the revised CPI basket, introduced in FY23, does not fully capture increases in food commodity prices and seasonal agricultural products.