Dearness Allowance is compensatory part of wages. In India, DA is being paid since the Second World War. During the War, DA became payable at various rates. It became payable as a result of different costs of living in different cities not known to each other.
Originally, it was the textile industry in Bombay which introduced DA scheme firstly under the bipartite settlement and subsequently they took the shape of arbitration, adjudication and finally, after knocking at the doors of industrial courts, got into awards, which is how in India DA scheme started.
In other parts of the world too DA was paid depending upon the rise in the cost of consumer goods prices. Within 5-10 years, the system of DA became a common system throughout the world but the basic principles remained the same.
In most parts of the world, though not everywhere, common platform DA became payable though not on the same rates.
Ultimately, the question of DA became a subject-matter of the Supreme Court. The court initially laid down general principles for fixation of DA grant and the link with cost of living index.
Slowly and gradually, Supreme Court gave effect to DA in terms of rise in the cost of living, higher prices and higher cost of living. This gave rise in the whole country for Consumer Price Index which is linked with rise in index in different cities in the country.
Bombay was found to be the most expensive city in the country and sometimes even in the world. It moves from time to time and so the atmosphere with it. At different times, each sphere had different price level which is recorded regularly on price index. Each price index is differently numbered and differently marked in each state.
In our country, this price index as Bombay Price Index, Delhi Price Index, Kolkata Price Index, Ahmadabad Price Index etc., and prices of each number in each city are differently made and known. This is preliminary of DA.
The issue of DA has gone much ahead and now it is paid according to the standard of each city in the country. With passing of time and cost of living going up, working class life became more and more miserable as a result of which every wage fixing authority had to view its point to the phenomenon and fortunately in our country the Government which is the biggest and model employer had to take cognizance of this fact and went on appointing pay commissions one after another after a lapse of five to 7 years and each pay commission gave thorough consideration to the problem of Dearness Allowance.
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