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Question

The basis of determining dearness allowance to employees in India is ______

This question was previously asked in
SSC CGL 2016 (Tier 1) Previous Year Question Paper (11-Sep-2016) (Shift 2)
The correct answer is

Consumer Price Index

Dearness allowance in India is calculated based on the Consumer Price Index (option 2). This allowance compensates employees for price inflation, calculated as a percentage of basic salary. The CPI tracks changes in prices of essential commodities, making it the most appropriate measure for adjusting salaries to maintain purchasing power against inflation.

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