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      Question

      Which of the following is used for calculating dearness

      allowance to government employees for increase in prices in India?
      A Statutory Liquidity Ratio (SLR) Correct Answer Incorrect Answer
      B Interest rate Correct Answer Incorrect Answer
      C Bank rate Correct Answer Incorrect Answer
      D Consumer Price Index Number for Industrial Workers (CPI-IW) Correct Answer Incorrect Answer

      Solution

      CPI or Consumer Price Index is the only component amongst three that changes on a monthly basis and these changes result in the increase/decrease of the variable dearness allowance. Base Index: this component of the VAD remains constant for a fixed period of time.

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