Question : The basis for determining the dearness allowance of employees in India is:
Option 1: National Income
Option 2: Consumer Price Index
Option 3: Standard of living
Option 4: Per capita income
Correct Answer: Consumer Price Index
Solution : The correct answer is the Consumer Price Index.
The Consumer Price Index Numbers for Industrial Workers (CPI-IW) are used to fix and revise wages to calculate variable Dearness Allowances paid to employees in the organized sectors of the economy. The CPI (IW) is currently used as an indicator for determining the country's inflationary trends and for policy formulation, even though its coverage is restricted to industrial workers.
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