The All India Defence Employees' Federation (AIDEF) has called on the 8th Pay Commission to review the inflation index used for determining dearness allowance (DA) and dearness relief (DR), contending that the existing framework does not accurately capture the increase in living costs borne by central government employees and pensioners.
In a second supplementary memorandum submitted to the 8th Pay Commission, AIDEF advocated the introduction of a separate Cost of Living Index designed specifically to reflect the spending patterns of central government employees and pensioners.
The federation contends that the current system, based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), may underestimate inflation experienced by households due to changes in the CPI basket.
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According to AIDEF, the revised CPI basket introduced in 2022-23 reduced the weightage of food and beverages to 36.75% from 45.86% under the 2012 series, while assigning greater weight to categories such as housing, healthcare, transport, communication and digital services.
“Many central government employees and pensioners spend a higher proportion of their income on food, medicines, healthcare, essential household items, house rent and education.
Consequently, they may experience a higher rate of inflation than that reflected in the revised CPI,” AIDEF said in its memorandum.
The federation further warned that pensioners could face an erosion in purchasing power if expenses on healthcare, medicines and caregiving services rise faster than overall CPI inflation.
AIDEF recommended that the 8th Pay Commission “examine the feasibility of creating a separate Cost of Living Index for central government employees and pensioners,” saying it would provide a more realistic basis for determining DA, DR, pay revisions and pension protection.
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