DA from July 2016 set to increase by 6% or 7% on the basis of All India Consumer Price Index (Industrial Workers) with base year 2001=100, for Pre revised Pay (Pay prior implementation of 7th Pay Commission)

DA from July 2016 – An analysis – Labour Bureau, Govt of India has released the Consumer Price Index (IW) for the month of April 2016.

Having actual All India Consumer price index for 10 months in hand, out of AICPI-IW needed for calculation of DA, an attempt has been made here to estimate the said DA from July 2016.

This DA estimation is based on Consumer Price Index (IW) with the base year 2001=100 which is being followed presently for calculation of Dearness Allowance applicable for Central Government Employees, Defence personnel and Pensioners.

7th Pay Commission has also recommended that the same consumer price Index could be retained for granting Dearness Allowance.

Here is the extract of analysis and recommendations of 7th Pay Commission relating to Dearness Allowance

“The VICPC had recommended that the National Statistical Commission may be asked to explore the possibility of a specific survey covering government employees exclusively, so as to construct a consumption basked representative of government employees and formulate a separate index. This has, however, not been done.

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.”

Hence, it is assumed that CPI-IW with the base year 2001=100 would be followed with effect from January 2016 on implementation of 7th Pay commission report as far as Dearness Allowance is concerned.

In that case, DA from July 2016 after implementation of 7th Pay Commission has to be calculated using the following DA Calculation Formula

[ (Average of Consumer Index for the period from July -2015 to Jun-16) – (Average All India Consumer Price Index for 2015) X 100] / Average All India Consumer Price Index for 2015

Based on the above formula, after merger of DA of 125% with Basic Pay, DA from January 2016 would be calculated as 0% and Likely DA from July 2016 after implementation of 7th Pay Commission will be 2% or 3%

DA from July 2016 for Pre-Revised Pay

CPI-IW from July 2015 to April 2016

Scenario 1: Possibility of increase in DA from July 2016 for Pre-Revised Pay working out to be less than 6%

Possibility of increase in DA from July 2016 working out to be less than 6% is very remote due to the fact that the index should be getting reduced by at least 4 points in any one of the coming two months from the previous month and further reduction of at least 3 points in the other month.

In other words index for May 2016 should be getting reduced by 4 points to 267 and also witness further reduction by 3 points to 264, for increase in DA from July 2016 less than 6%. If index for May 2016 registers not more than 3 point reduction then index for June 2016 has to reduce at least by 4 points in order get the less than 6% increase in DA from July 2016

Calculation of DA from July 2016 based on CPI(IW) from July 2015 to June 2016

Scenario 2: Possibility of increase in DA from July 2016 for Pre-Revised Pay working out to be 6%

Even if index gets lower by 3 points during both of these months compared to previous month, viz., May 2016 registers 3 point reduction from April and further three point reduction in June 2016 compared to May 2016, increase in DA from July 2016 will be 6%.

We are of the opinion that increase in DA from July 2016 registering at least 6% is quite possible as chances for CPI (IW) getting reduced to less than 265 from the present level 271 in two months is very remote.

Scenario 3: Possibility of increase in DA from July 2016 for Pre-Revised Pay working out to be 7%

If CPI (IW) gets increased at least by 2 points in any one of the coming two months and by 1 point increase in the other month compared to previous month, then DA from July 2016 will be poised for an increase of 7%.

In other words, if consumer price index for May 2016 and June 2016 witnesses at least 2 point increase and further 1 point increase respectively or vice versa, increase in DA from July 2016 is calculated to be 7%

Considering the inflationary trend shown by 3 point increase in April 2016, this scenario may become a reality. In that case DA from July 2016 will be 7%

Scenario 4: Possibility of increase in DA from July 2016 for Pre-Revised Pay working out more than 7%

In order to get an increase in DA from July 2016 more than 7%, CPI(IW) for both May 2016 and June 2016 should witness at least 7 point increase from the present level of 271. If any one of this month registers lesser increase than 7 points then the other month has to compensate the same by registering increase of index by more than 7 points.

It is apparent that possibility for such an increase in CPI(IW) is not at all Possible. Hence we can conclude that increase in DA from July 2016 may not be more than 7%

Source: gconncect.in

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DA from July 2016 set to increase by 6% or 7% on the basis of All India Consumer Price Index (Industrial Workers) with base year 2001=100, which has been recommended to be retained by 7th Pay Commission for calculation of Dearness Allowance

DA from July 2016 – An analysis – Labour Bureau, Govt of India has released the Consumer Price Index (IW) for the month of April 2016 yesterday.

Having actual All India Consumer price index for 10 months in hand, out of AICPI-IW needed for calculation of DA, an attempt has been made here to estimate the said DA from July 2016.

This DA estimation is based on Consumer Price Index (IW) with the base year 2001=100 which is being followed presently for calculation of Dearness Allowance applicable for Central Government Employees, Defence personnel and Pensioners.

7th Pay Commission has also recommended that the same consumer price Index could be retained for granting Dearness Allowance.

Here is the extract of analysis and recommendations of 7th Pay Commission relating to Dearness Allowance

“The VICPC had recommended that the National Statistical Commission may be asked to explore the possibility of a specific survey covering government employees exclusively, so as to construct a consumption basked representative of government employees and formulate a separate index. This has, however, not been done.

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.”

Hence, it is assumed that CPI-IW with the base year 2001=100 would be followed with effect from January 2016 on implementation of 7th Pay commission report as far as Dearness Allowance is concerned. In that case, after merger of DA of 125% with Basic Pay, DA from January 2016 would be calculated as 0%.

CPI-IW from July 2015 to April 2016

Scenario 1: Possibility of increase in DA from July 2016 working out to be less than 6%

Possibility of increase in DA from July 2016 working out to be less than 6% is very remote due to the fact that the index should be getting reduced by at least 4 points in any one of the coming two months from the previous month and further reduction of at least 3 points in the other month.

In other words index for May 2016 should be getting reduced by 4 points to 267 and also witness further reduction by 3 points to 264, for increase in DA from July 2016 less than 6%. If index for May 2016 registers not more than 3 point reduction then index for June 2016 has to reduce at least by 4 points in order get the less than 6% increase in DA from July 2016

Calculation of DA from July 2016 based on CPI(IW) from July 2015 to June 2016

Scenario 2: Possibility of increase in DA from July 2016 working out to be 6%

Even if index gets lower by 3 points during both of these months compared to previous month, viz., May 2016 registers 3 point reduction from April and further three point reduction in June 2016 compared to May 2016, increase in DA from July 2016 will be 6%.

We are of the opinion that increase in DA from July 2016 registering at least 6% is quite possible as chances for CPI (IW) getting reduced to less than 265 from the present level 271 in two months is very remote.
Scenario 3: Possibility of increase in DA from July 2016 working out to be 7%

If CPI (IW) gets increased at least by 2 points in any one of the coming two months and by 1 point increase in the other month compared to previous month, then DA from July 2016 will be poised for an increase of 7%.

In other words, if consumer price index for May 2016 and June 2016 witnesses at least 2 point increase and further 1 point increase respectively or vice versa, increase in DA from July 2016 is calculated to be 7%

Considering the inflationary trend shown by 3 point increase in April 2016, this scenario may become a reality. In that case DA from July 2016 will be 7%
Scenario 4: Possibility of increase in DA from July 2016 working out more than 7%

In order to get an increase in DA from July 2016 more than 7%, CPI(IW) for both May 2016 and June 2016 should witness at least 7 point increase from the present level of 271. If any one of this month registers lesser increase than 7 points then the other month has to compensate the same by registering increase of index by more than 7 points.

It is apparent that possibility for such an increase in CPI(IW) is not at all Possible. Hence we can conclude that increase in DA from July 2016 may not be more than 7%

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Press Release

Consumer  Price Index for Industrial  Workers  (CPI-IW) – April, 2016

The All-India CPI-IW for April, 2016 increased by 3 points and pegged at 271 (two  hundred  and  seventy  one).  On  l-rnonth  percentage  change,  it  increased  by (+)  1.12 per cent  between  March,  2016 and April,  2016 when  compared  with  the increase of(+)  0.79 per cent between the same two months a year ago.

The maximum upward pressure to the change in current index came from Food group contributing  (+)  2.65  percentage  points  to the  total  change.  At  item  level, Wheat, Arhar Dal, Gram Dal, Masur Dal, Urd Oal, Groundnut Oil, Poultry (Chicken), Milk, Chillies Dry, Chillies Green, Potato, Tomato,  Seasonal Vegetables and Fruits. Tea (Readymade), Sugar, Doctors’  Fee, Petrol, Tailoring Charges, etc. are responsible for the increase in index. However, this increase was checked  by Rice, Fish Fresh, Garlic, Onion, Soft Coke, Flower/Flower  Garlands, etc., putting downward  pressure on the index.

The year-on-year  inflation measured by monthly CPI-IW stood at 5.86 per cent for April, 2016 as compared to 5.51 per cent for the previous month and 5.79 per cent during the corresponding  month of the previous  year.  Similarly, the  Food  inflation stood at 7.55 per cent against 6.16 per cent of the previous  month and 5.30 per cent during the corresponding month of the previous year.

At centre level, Rourkela reported the maximum increase of 10 points followed by  Goa  (8  points),   Angul-Talcher,   Rangapara-Tezpur,   Warrangal,   Sholapur  and Varanasi (7 points each). Among others, 6 points increase was observed in 3 centres,S points in 10 centres,  4 points in 15 centres,   3 points  in 11 centres,  2 points in 11 centres and  1 point  in  11 centres.  On  the  contrary,  Quilon  recorded  a  maximum decrease of 5 points followed by Madurai (3 points), Salem and Rajkot (2 points each) and  Tiruchirapally  and  Ghaziabad  (1  point  each).  Rest  of  the  4  centres’   indices remained stationary.

The  indices  of  35 centres  are  above  All-India  Index  and  other  41 centres’ indices are  below  national  average. The  indices of Vishakhapatnam  and Ludhiana centres remained at par with All-India Index.

The next  issue of CPI-IW  for the month  of May, 2016  will  be released  on Thursday,  30th  June,  2016. The same  will also  be available  on the office website www.labourbureaunew.gov.in.

Source: Labour Ministry Press Release dated 31.05.2016

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Ministry of Labour and Employment has released All India Consumer Price Index for the month of September 2015. It has reached 266 which is two point increase over the previous month. Unlike penultimate DA Installment estimation, the pattern of Consumer Price Indices that are available for arriving at expected Dearness Allowances from January 2016 provides us precise idea on expected DA from January 2016. Hence, we thought of making a prediction analysis a bit earlier this time.

In fact, the quantum of DA with effect from 1st January 2016, is very crucial for Central Government Employees and Pensioners, as it is going to determine the DA merged Pay and increase in allowances after implementation of 7th Pay Commission.

As a first step let us list the Actual AICPI – IW which are available as on date, for estimating DA from January 2016.

Out of 12 Consumer Price Indices which are required to determine DA with effect from January 2016, nine indices are already available. So, consumer price indices for remaining three months will have to be assumed.

We have taken three possible assumptions this time, such that each assumption gives different quantum of increase in DA from January 2016.

Assumption 1: (Assumption of CPI for getting least possible increase in DA from January 2016)

The least increase in DA from January 2016 will be 5% (i.e., DA from January will be 124% ). Under this assumption, DA from January 2016 will be 124% only if CPI falls below the present level of 266 in at least two of three coming months. Though Chances for this scenario coming to reality is possible but the increasing trend in consumer price index from February 2015 negates this possibility.

Assumption 2: (Assumption of CPI for getting maximum possible DA from January 2016):

DA from January 2016 is calculated to be 126%, only if CPI touches 272 from the present level of 266, at least two times in the coming three months with at least one point increase in the remaining month.  We feel that this scenario is remotely possible considering the trend of CPI, which shows only moderate inflation.

Assumption 3: (Assumption of Most Possible Consumer Indices ):

Steady increase in AICPI-IW could be found from February 2015 at the rate of one to two point increase over previous month.

Even if CPI from October 2015 to December 2015 remains at 266 , DA from January 2016 will be 125%. Considering the trend in CPI in the recent months, it could be safely presumed that indices would increase one or two points in the coming months or at least remains in the same level. In both of these cases, DA from January 2016 will be 125%.

It is apparent that Assumption 3 has got better chances out of these three assumptions. Hence we can safely bet that DA from January 2016 will be 125%.

Source: gconnect.in

The post Expected DA from January 2016 which is crucial for 7th CPC Pay appeared first on CENTRAL GOVERNMENT EMPLOYEES NEWS.

Projected DA From May 2014 -PROJECTED D.A. FROM MAY, 2014 By Sri pannvalan

The AICPI-IW (1960=100) for January, 2014 was 237 and for February, 2014, the index stood at 238.

As per the present trend in retail inflation, the index may remain unchanged at 238 for March, 2014 too. If it happens, the D.A. will fall to 97.05%, from the existing level of 99.90%.

Even if the index records a modest rise of 1 point and touches 239 for March, 2014, yet there will be a downfall and the revised D.A. will be only 97.35%.

When the central government employees are getting D.A. of 100% on their Basic Pay, Grade Pay and Transport Allowance effective 01-01-2014, it is regrettable that our D.A. that is already below this 100% mark has started its downward journey (D.A of Central government employees will be at 100% till 30-06-2014 and our new D.A. from May, 2014 will be in force till 31-08-2014).

For retaining the D.A. at the present level of 99.90%, the index must increase by 10 points in March, 2014 (touching 248 points), registering an inflation of 4.20% in one month (i.e.50.40% annualized), which is ruled out.

D.A. of bank staff was merged at 2836 points in 1960=100 series, when 9th BPS was implemented from 01-11-2007.  Despite merger of D.A. at a higher level (2836 points) than the central government staff (2642 points), the Dearness Allowance of bank staff is less than that of Central Government staff, because of faulty construction of pay scales and lesser D.A. compensation per slab for the bank staff.

Moreover, if the central government employees get 50% of their present D.A. merged with their Basic Pay, as an interim measure, the difference will widen further. I shudder to think of the situation after the 7th CPC is fully implemented.

Will UFBU wake up at least now?

Date: 31-03-2014-pannvalan

Source-http://importantbankingnews.blogspot.in/2014/04/projected-da-from-may-2014.html

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