The constitution of a Pay Commission, at regular intervals, is
necessitated to examine the pay structure of employees and to revise it based
upon the changing requirements. The expectation of the employee community
is that their pay should be increased by the Government from time to time
keeping in view the increase in the cost of living, increased expectations with
regard to life style and in the case of the retired government servants the
increase in life span with consequent problems arising out of age related
02.03 In order to meet the situation arising due to high levels of
inflation, a mechanism had also to be found by the Government to neutralize
the effect of inflation on the wages of its employees to cover the interregnum
between the Pay Commissions. Sanction of Dearness Allowance at periodic
intervals according to a pre‐determined formula was the Government response
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