8th Pay Commission: AIDEF Calls for Reevaluation of DA and DR Calculations

The All India Defence Employees’ Federation (AIDEF) is pushing for a reassessment of how Dearness Allowance (DA) and Dearness Relief (DR) are calculated by the 8th Pay Commission. They argue that the current inflation index does not accurately reflect the financial realities faced by government employees and pensioners. AIDEF highlights the need for a new cost-of-living index that better captures actual spending patterns, especially for lower-income households and pensioners who face unique challenges. This call for change comes amid rising costs of essential goods and services, raising concerns about the adequacy of current measures to protect purchasing power.

By Narendra Chaudhary Jun 23, 2026, 12:01 IST

8th Pay Commission Update

The discussion surrounding the calculation of Dearness Allowance (DA) and Dearness Relief (DR) has intensified, with the All India Defence Employees’ Federation (AIDEF) urging the 8th Pay Commission to revisit the inflation index methodology currently in use. In their recent appeal to the commission, AIDEF expressed concerns that the existing approach may not accurately reflect the financial challenges faced by government employees and retirees. They pointed out that shifts in consumption habits and the increasing costs of essential goods and services have created a disparity between official inflation figures and the real expenses incurred by households.

Currently, the adjustments to DA and DR are based on the 12-month average of the All India Consumer Price Index for Industrial Workers (AICPI-IW). This index is designed to help central government employees and pensioners cope with inflation and maintain their purchasing power. However, AIDEF argues that the current system has its shortcomings. They believe that the weight assigned to different spending categories within the index fails to accurately represent the inflation experienced by many households, especially those with lower incomes.

A significant issue pertains to the revised Consumer Price Index basket introduced in 2022-23. AIDEF contends that this updated structure does not adequately reflect the volatility in food prices and seasonal agricultural products, which are a major part of household expenditures for numerous families.

Revised CPI Basket Under Scrutiny

The federation pointed out that the proportion of food and beverages in the index has decreased over time. In 2012, food and beverages made up 45.86% of the CPI basket, but this figure has dropped to 36.75% in the revised 2022-23 basket. Conversely, more weight has been given to categories such as healthcare, housing, transport, communication, and digital services. AIDEF argues that these changes may lessen the impact of significant food price hikes when calculating DA and DR.

According to AIDEF, employees in lower income brackets tend to spend a larger share of their earnings on essentials like food, healthcare, rent, and education. Consequently, their personal inflation experiences may differ greatly from what the official index suggests.

Pensioners Face Unique Challenges

AIDEF has also highlighted the unique challenges faced by pensioners, who often dedicate a considerable portion of their income to medical and caregiving expenses. The federation noted that costs associated with health insurance, medications, treatments, and caregiving services can escalate more rapidly than general inflation trends. In such scenarios, the periodic DR adjustments based on the current index may not adequately safeguard against the decline in purchasing power. This issue is particularly pressing as healthcare expenses continue to rise, adding strain on retired individuals living on fixed incomes.

Federation Suggests Employee-Specific Cost-of-Living Index

To tackle these issues, AIDEF has proposed the establishment of a specialized cost-of-living index specifically designed for employees and pensioners. This initiative aims to more accurately reflect actual spending patterns and adapt to evolving consumption trends. The federation has also called for increased acknowledgment of elderly care costs and other vital expenses when determining future fitment factors and revising pay and pension structures under the 8th Pay Commission.