Question : The basis of determining dearness allowance to employees in India is
Option 1: national income
Option 2: consumer price index
Option 3: standard of living
Option 4: inflation rate
Correct Answer: consumer price index
Solution : The correct answer is the consumer price index.
The consumer price index is used in India to calculate the Dearness Allowance (DA) for government employees. A benefit known as a Dearness Allowance (DA) is provided to employees to offset the impact of inflation on their real income and pay. The computation accounts for the effect of inflation in each employee's specific area.
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