Question:
Which of the following price indices is used for calculating government employee's dearness allowance?
Which of the following price indices is used for calculating government employee's dearness allowance?
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CPI (Consumer Price Index):
• Measures inflation at the consumer level.
• Used to revise Dearness Allowance (DA) for government employees and pensioners.
• Compiled by the National Statistical Office (NSO).
• Measures inflation at the consumer level.
• Used to revise Dearness Allowance (DA) for government employees and pensioners.
• Compiled by the National Statistical Office (NSO).
Updated On: Jul 15, 2026
- Whole Sale Price Index
- Consumer Price Index
- Retail Price Index
- Daily Price Index
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The Correct Option is B
Solution and Explanation
Concept:
Dearness Allowance (DA) is given to government employees and pensioners to reduce the impact of inflation. It is revised based on the Consumer Price Index (CPI).
Step 1: Understand the purpose of CPI.
The Consumer Price Index measures the average change in the prices of goods and services consumed by households.
Step 2: Analyse the options.
• Wholesale Price Index (WPI) -- Measures wholesale price changes.
• Consumer Price Index (CPI) -- Used for calculating Dearness Allowance. \checkmark
• Retail Price Index -- Not the official index used for DA.
• Daily Price Index -- No such standard index is used.
Step 3: Final conclusion.
Hence, the price index used for calculating government employees' Dearness Allowance is \[ \boxed{\text{Consumer Price Index (CPI)}.} \]
Step 1: Understand the purpose of CPI.
The Consumer Price Index measures the average change in the prices of goods and services consumed by households.
Step 2: Analyse the options.
• Wholesale Price Index (WPI) -- Measures wholesale price changes.
• Consumer Price Index (CPI) -- Used for calculating Dearness Allowance. \checkmark
• Retail Price Index -- Not the official index used for DA.
• Daily Price Index -- No such standard index is used.
Step 3: Final conclusion.
Hence, the price index used for calculating government employees' Dearness Allowance is \[ \boxed{\text{Consumer Price Index (CPI)}.} \]
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