Dearness Allowance is an allowance which the government pays to its employees and pensioners. It is a cost of living adjustment allowance and is calculated as a percentage of an Indian citizen's basic salary to counter the impact of inflation on citizens. There are two different types of Dearness Allowances: 1. Industrial Dearness Allowance (IDA) 2. Variable Dearness Allowance (VDA) Industrial Dearness Allowance (IDA) is applicable to public-sector employees of the central government. IDA for public sector employees undergoes quarterly revision depending on the Consumer Price Index (CPI) to help combat the impact of rising inflation levels. Variable Dearness Allowance (VDA) is applicable to employees of the central government. It is revised every six months according to the Consumer Price Index (CPI) to help offset the impact of rising levels of inflation. VDA is dependent on different components as given below: 1. Base Index which remains fixed for a particular period 2. Consumer Price Index which impacts VDA as it changes every month The government fixes Variable DA amount and it remains the same until the government revises the basic minimum wages.