Dear Friend,
Keeping the remuneration of the employees abreast of the prevailing price level is achieved by introducing the component of Variable Dearness Allowance linked to any one of the Cost of Living Indices in the salary or wage structure.This is normally done independent of the annual or periodical increment granted to employees as per individual practice. This would ensure uniformity in remuneration hike simply related to the raise in the points of the CLI. A prominent example in this regard is the V.D.A pattern adopted by the Govts in fixation of wages under the Minimum Wages Act,1948.
Alternatively, we may also resort to converting the hike in the points of CLI as a percentage to the Basic Pay of the employees for the purpose of V.D.A revision so as to effect the hike proportionate to the wage scales. An example in this regard is the D.A pattern followed by the Central and State Governments for their various departments.