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DA from January 2017 will be 4% or 5% – Dearness Allowance Estimation

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DA from January 2017 will be 4% or 5% – Dearness Allowance Estimation

DA from January 2017 will be 4% or 5% based on Consumer Price Index (Industrial Workers) from January 2016 to December 2016 – Net increase in DA with effect from January 2017 is estimated to be 2% or 3%

All India Consumer Price Index (Industrial Workers) for the month of November 2016 has been released by Ministry of Labour few days back.

What do we need for estimating DA from January 2017 ?

After implementation of 7th Pay Commission report, same inflation index i.e Consumer Price Index (Industrial Workers) with base year 2001=100, which was used for 6th Pay Commission Pay, is adopted for determining Dearness Allowance of Central Government Employees and Pensioners.

The only difference in DA calculation as far as DA from January 2016 will be, will be taking the Average of CPI-IW recorded in 2015 in the place of Average of CPI-IW recorded in 2005 which was used in 6th CPC DA calculation

Dearness Allowance payable after implementation of 7th Pay Commission = (Avg of CPI-IW for the past 12 months – Average of CPI-IW recorded in 2015)*100/(Average of CPI-IW recorded in 2015)

In order to determine DA with effect from January 2017, based on the above formula we need Consumer Price Index for the months from January 2016 to December 2016

Now that Consumer Price Index for the months from January 2016 to November 2016 is available, we have made an attempt to estimate Dearness Allowance applicable to Central Government Employees and Pensioners with effect from 1st January 2016, by assuming the possible CPI (IW) for the month of December 2016.

Month Actual AICPI-IW
Jan-2016 269
Feb-2016 267
Mar-2016 268
Apr-2016 271
May-2016 275
Jun-2016 277
Jul-2016 280
Aug-2016 278
Sep-2016 277
Oct-2016 278
Nov-2016 277
Dec-2016 Yet to be released

Estimation of DA from 1st January 2017:

Scenario 1 : No increase in AICPI (IW) in December 2016

AICPI (IW) for November 2016 is 277. If AICPI (IW) for December 2016 remains the same as November 2016, there will be additional 1% increase in DA from January 2017 which would make overall DA as 5%.

DA with effect from 1st January 2017 = [ (269+267+268+271+
275+277+280+278+
277+278+277+277)/12]-(261.4)
X100/261.4
= 5 %

Scenario 2: Decrease in AICPI (IW) in December 2016

Even if All India Consumer Price Index (Industrial Workers) decreases by 31 point and pegged at 246 in the month of December 2016, DA from January 2017 will be 4% . At the same time even for 1 point decrease in the index for December 2016 will result in lesser DA increase from January 2017 compared to Sceanrio 1 in which index is unaltered in Dec 2016.

DA with effect from 1st January 2017 = [ (269+267+268+271+
275+277+280+278+
277+278+277+246)/12]-(261.4)
X100/261.4
= 4 %
DA with effect from 1st January 2017 = [ (269+267+268+271+
275+277+280+278+
277+278+277+276)/12]-(261.4)
X100/261.4
= 4 %

Scenario 3 : Increase in AICPI (IW) in December 2016

It is very interesting to note here that, even for increase in consumer price index in the month of December up to 31 points, i.e Increase in AICPI (IW) for December 2016 to 308 points from 277 points in November 2016, DA from January 2017 will be 5% only.

DA with effect from 1st January 2017 = [ (269+267+268+271+
275+277+280+278+277+
278+277+308)/12]-(261.4)
X100/261.4
= 5 %

The other scenario that increase of more than 31 points in AICPI (IW) in the month of December 2016 for making DA with effect from January 2017 more than 5% is most unlikely.

Hence, it is more logical to conclude that DA from January 2017 will be either 4% or 5%.

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Be the first to comment - What do you think?  Posted by admin - January 3, 2017 at 6:14 pm

Categories: Dearness Allowance, Expected DA   Tags: , , , , , , ,

7th CPC DA Calculation – Important factor of AICPI (IW) BY 2001 continue or not..?

7th CPC DA Calculation – Important factor of AICPI (IW) BY 2001 continue or not..?

 

Dearness Allowance is one of the important issues that the Pay Commission deals with. The calculation method that was recommended by the 6th Pay Commission was radically different from the ones suggested by all the previous Pay Commissions. Dearness Allowance, which was increasing by 1 or 2% until the 5th Pay Commission suddenly shot up to the peak of double-digit numbers.

 

Until the 5th CPC, the Consumer Price Index Number for Industrial Workers 1982 = 100 was used for calculating dearness allowance. From the 6th Pay Commission onwards, CPI (IW) 2001=100 was used for calculating the DA.

 

There was another crucial change that the 6th CPC made. It recommended that the Reference Base Index be changed from 306.33. As a result, 115.76 became the new Reference Base Index from 01.01.2006 onwards.

 

Will the 7th CPC introduce a new CPI (IW)? Or will it bring about changes in the Reference Base Index?

 

This is something that everybody wants to know.

 

Just watch the difference between 5th and 6th CPC DA Calculation methods…

 

 

5th CPC calculation method is given below…

 

The extant formula for calculation of DA till 1-1-2004 was:

 

12 Monthly Average – 306.33
——————————————————–  x 100 = percentage increase in prices
306.33

 

The Fifth Pay Commission had recommended that DA should be converted into DP each time the CPI increased by 50% over the base index. The Government merged 50% of DA with the
basic pay w.e.f. 1-4-2004. The formula for calculation of DA for the period from 1-7-2004 is:

 

12 Monthly Average – 306.33
{  ————————————————  x 100} – 50 = percentage increase in prices
306.33

 

6th CPC calculation method is given below…

 

(12 Monthly Average) – 115.76
——————————————————–      x 100 = percentage increase in prices
115.76

 

Source: http://7thpaycommissionnews.in/

Be the first to comment - What do you think?  Posted by admin - November 17, 2014 at 5:02 pm

Categories: 6CPC, 7CPC, AICPIN, Dearness Allowance, Employees News, Latest News   Tags: , , , , , , , ,

FINANCE MINISTRY DA ORDER JAN 2014 -WHEN IT WILL COME-DA ARREARS CALCULATOR

FINANCE MINISTRY DA ORDER JAN 2014 -WHEN IT WILL COME-DA ARREARS CALCULATOR

FINANCE MINISTRY DA ORDER JAN 2014 – WHEN IT WILL COME

No one can deny the fact that DA is a very important allowance as of now. This applies to both state and central government employees. On the 28th of February 2014, 10 % DA increase was approved by the cabinet and then the announcement about the same came out. In the past, mostly, this announcement and the Finance Ministry order have come out in the month of March. Hardly, has this ever changed so far. So the finance ministry order on DA is expected to come soon.
After the order on the 10% DA is received, the corresponding DA value will be paid as arrears for the first two months and then it will paid along with the month’s salary. Similarly, every time when the DA touches 50%, some allowances can increase up to 25%. We have already got the benefits of the 50% DA increase. Now, as it has reached 100%, a formal announcement is expected to come out soon. Everyone can easily calculate the benefits that we’ll get from a 10% increase. However, for your convenience, I have attached a calculator to help you to find out how much you will get as two month’s arrears and the other benefits that you will get due to the DA increase.

Source: www.7thpaycommissionnews.com
[http://www.7thpaycommissionnews.com/2014/03/finance-ministry-da-order-jan-2014-when.html]

1 comment - What do you think?  Posted by admin - March 26, 2014 at 10:19 am

Categories: Dearness Allowance, Employees News, Expected DA, General news   Tags: , , , , ,