DA & Linking Factor : What is expected? : DA Announcement and linking factor explored


DA & Linking Factor  What’s expected?  DA Announcement and linking factor explored.

As you all know that DA is calculated based on AICPIN.

AICPIN is calculated based on the inflation and the cost of living in various cities. So, what’s going to happen in 7th Pay Commission, let’s read.

In Pay Commission III, the base year was used as (1960 =100).

In 4th Pay Commission, the DA was decided to pay twice a year and also for calculating the DA value the percentage increase in the 12 monthly average of All India Consumer Price Index (base 1960). Also the base year was (1982=100) as the base year.

In 5th Pay Commission, the DA was decided based on (1982=100) as the base year.

In 6th Pay Commission, the DA was decided based on (2001=100) as the base year.

In 7th Pay Commission, should we expect to have the base year as (2011=100)?

When the DA calculation change happened from base year 1982 to base year as 2001, there were a steep increase in the DA percentage, this is because the cost of living has increased multifold and also various cities and items was also included while calculating the real DA.

So, what’s been recommend in the 7th CPC Report

Keeping in mind that the present formulation of DA has worked well over the years, and there are no demands for its alteration, the Commission recommends continuance of the existing formula and methodology for calculating the Dearness Allowance.

and also check out the gazette notification changes where the linking factor has been included as on AICPIN value as 2016.

IV. Dearness Allowance

Sl.No. Recommendation of the Seventh Central Pay Commission Decision of the Chief Justice of India
1. Existing formula and methodology for calculating Dearness Allowance to continue (Para 8.17.37 of the Report) Accepted. The reference base for calculation of Dearness Allowance after coming into force of the revised Pay Structure shall undergo change accordingly and will be linked to the average index as on 01.01.2016

Though in (2001=100) the linking factor was 4.63, this lead to the calculation of DA with the average index as 115.76 as per 2005. For example, (2005 , 12 Month Average Index  536, so the linking factor as per record was 4.63).

All India and Centre-wise Linking factors between New Series of Consumer Price Index Numbers for Industrial Workers on base 2001 = 100 and the previous series on base 1982=100 (General Index).

Table No. 9.01


Group Linking Factor
I-A Food Group 4.58
I-B Pan. Supari, Tobacco & Intoxicants 6.16
II Fuel & Light 4.77
III Housing 6.18
IV Clothing. Bedding & Footwear 3.22
V Miscellaneous 4.55

Note: Figures on previous base 1982 = 100 can be obtained by multiplying the Index Number on current base 2001 = 100 by the linking factor and rounding off the result to the nearest whole number.

As you all now understand that the linking factor play a major role in getting the DA value, but the linking factor for year 2016 .

I was not able to find this data in Labour Bureau . We assume that if the linking factor of 2016 used, then we expect to get a higher DA percentage (assumption). This means it would be a real DA value as it would include various cities and the current inflation and CPI.

We hope that when the results are out they would be using the linking factor of 2016 as the gazette notification has this mentioned. Normally the DA announcement is release in September 1st week or 2nd week and hope this is announced shortly.

Source :  7thpaycommissionnews.com

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