Explanation:

Normally remuneration package to employees were consisting of basic wage and dearness allowance. In due course of time due to changes in job situations, changing environment especially due to rising prices the basic wage and dearness allowance together were not found adequate as remuneration package provided to employees.
Employees are employed with a particular wage or salary rate. In due course of time due to price increase, the real income of employees goes down. It means with the same level of wages employees are unable to buy goods and services, which they were able to buy before increase in prices. Dearness Allowance is paid to employees by way of compensating them for the loss of real income caused to them by increase in the cost of living due to increase in prices.