Method of Calculation of Dearness Allowance and Expected DA Increase from 2013


Method of Calculation of Dearness Allowance and Expected DA Increase from 2013

Calculation of DA(Dearness Allowance) Rates

  •     DA rates for Government employees are to be announced half yearly which will be applicable from first January and First July.
  •     On implementation of Sixth Pay Commission recommendations with effect from 01.01.2006 a new method of calculation of DA (dearness allowance) rates is adopted by Central (including Railways)and State Governments.
  •     DA rates are fixed on the basis of All India Consumer Price Index (AICPI) for industrial workers with Base year as 2001.

Method of Calculation
DA is calculated using the following formulae:

Dearness Allowance = (Avg of AICPI for the past 12 months – 115.76)*100/115.76
(Fractions are ignored)

The figure 115.76 signifies the average of price index from Jan 2005 to Dec 2005.

Example: To calculate Jan 2013 DA rate Price index average from Jan 2012 to Dec 2012 is taken.

AICPI data for Jan 2012 to Dec 2012 as per Labour Bureau, Department Statistics, Government of India website is as follows:

Jan-12 198
Feb-12 199
Mar-12 201
Apr-12 205
May-12 206
Jun-12 208
Jul-12 212
Aug-12 214
Sep-12 215
Oct-12 217
Nov-12 218
Dec-12 219
Total 2512
Average 209.33


Dearness allowance (01.01.2013)=( 209.33-115.76)*100/115.76=80.83

  • DA  (after ignoring fraction)=80 %
  • So Rate of DA expected from 01.01.2013 is 80 %
  • The rate of increase will be 8% (72% to 80%).

Source: Indian railway employee

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