DEARNESS ALLOWANCE

The Concept…

 The word Dearness means “The quality possessed by

something with a great price or value”
 It is an allowance given to worker to bear the cost of
living due to inflation, so that he / she can at least live
his life in "some comfort"
 DA got introduced for neutralizing the impact of inflation
 Subsequently, it became a part of the salary & wage
structure and in the union-management negotiations
 It is not mandatory to have DA as part of wages.
 DA is a part of salary for computation of
 Provident Fund
 Gratuity
 ESI
Variable Dearness Allowance (VDA)

 Recommended in the Labour Ministers' Conference held

in 1988
 Concept introduced to evolve a mechanism to protect
wages against inflation by linking it to rise in the
Consumer Price Index.
 The Variable Dearness Allowance came into being in the
year 1991.
 Allowance is revised twice a year, once on 1st April and
then on 1st October.
 In the State Sphere, 22 States/Union Territories have
provisions for Variable Dearness Allowance, at present.