AICPIN for the month of July 2018 – Expected DA Jan 2019?

AICPIN for the month of July 2018

The All India Consumer Price Index Numbers for Industrial Workers on base 2001=100 for the month of July 2018 is increased by 10 points and stands at 301.

Dearness Allowance for Central Government Employees (also Dearness Relief for Central Government Pensioners) is calculated based on All India Consumer Price Index Numbers declared by Labour Bureau under Ministry of Labour and Employment in the last day of every month.

DA and DR to existing employees and pensioners is being given twice in a year, i.e., Jan to Jun and Jul to Dec.

This year first instalment of DA and DR from January to June 2018 approved by the Cabinet Committee and waiting for Finance Ministry Notification.

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It is becoming very obvious these days that the Central Government employees and pensioners are fast losing interest in Dearness Allowance.

Dearness Allowance is given to the Central Government employees once every six months, in order to help them maintain their lifestyle against the rising prices. Fluctuations in the prices of 392 essential items are recorded regularly at 78 various locations and their data is tabulated once every month to calculate the All India Consumer Price Index Number (AICPIN), which is then released by the Centre. Dearness Allowance is thus calculated.

For ten years now, we have been calculating the Dearness Allowance in advance and releasing the numbers. This is why we are able to sense an acute loss of interest among the Central Government employees in recent times to know their next and expected Dearness Allowance.

Dearness Allowance is calculated with the employee’s basic salary. For example, a 7 percent Dearness Allowance for an employee who draws a basic salary of Rs.18000 per month, will translate into Rs. 1260.

All the Central Government employees, defence personnel and pensioners are now being paid as per the recommendations of the Seventh Pay Commission, from January 2016 onwards. The Seventh Pay Commission had recommended that no changes shall be made in the Dearness Allowance calculations and the method adopted by the Sixth Pay Commission continues to be followed. The centre too had accepted the recommendations.

Under the Sixth Pay Commission method, the Dearness Allowance had increased by 125 percent in the past ten years, from January 2006 to December 2015. It is worth mentioning that at least thrice, a Dearness Allowance of 10 percent was paid to the employees. The table below shows the Dearness Allowance that was paid once every six months.

The loss of interest among the employees probably has something to do with the fact that the increase in Dearness Allowance has only been marginal ever since the Seventh Pay Commission was implemented.

There was no Dearness Allowance for the first six months, January to June 2016. Dearness Allowance of only 2 percent was given for July to December 2016. It looked as if something was wrong with the calculations, right from the start, but the employees thought that things will improve with time. The Dearness Allowance for January to June 2017 was a mere one percent, which came as a rude shock to all. And then, Jul to Dec 2017 is 5% and Jan to Jun 2018 is being fixed as 7% as per the calculations.

The centre claimed that it was because they have the prices under control.

So, what is the Dearness Allowance for the second term of 2018, July to December 2018, likely to be?

This time too, it is not expected to exceed 3 percent.

We expect the Dearness Allowance to be 9% or 10% with effect from July 2018.

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People started to calculate expected DA from January 2017 as 7 Months AICPIN Points are released so far. The Labor Bureau has released Consumer Price Index Numbers for Industrial Workers for the Month of July 2016 today. Already It is confirmed that Dearness Allowance from July 2016 might be 2% as per the revised DA calculation.

Now, see the 7th CPC DA calculation Formula.

DA calculation Expected DA from July 2016 in Sixth and 7th Pay Commission

There are three main factors which determine the increase in percentage of DA in every pay Commission

1.DA calculation Formula
2.AICPIN for Industrial Workers
3. Base Average Index

1. Formula for DA calculation

2. AICPIN for Industrial Workers

The Consumer Price Index for Industrial Workers (CPI-IW) is an important statistical/economic indicator. It was first introduced on scientific lines with base 1960=100 which was based on the results of Family Living Survey conducted in 1958-59 at 50 industrially important centres. The series was then, updated on base 1982=100 and a revision in 1999-2000 has further updated the base on 2001=100. The current series of CPI-IW with base year 2001=100 covers 78 industrially important centers spread across the country

3. Base Average Index

After neutralization of DA to revise the Pay and Allowance in Every Pay Commission, the Base Average Index will be modified taking into the account of 12 Months AICPIN points of previous year to neutralization of DA

1. From 1996 onwards, the average base Index was 306.33 (with base 1982=100)
How 306.33 was arrived?

To calculate the DA in Fifth pay commission, the 12 Month Average of AICPIN for the year 1995 was taken. The 12 months AICPIN Average of 1995 was 306.33

2. From 2006 onwards, the Avarage Base Index is 115.76 (with Base 2001 = 100)
How 115.76 was arrived…?

The Government has developed a new series with base 2001, with effect from January 2006. Back data series with base 2001 can be generated using linking factor 4.63

So the AICPIN Average of 2005 (with base 1982=100) i.e 536 had to be modified using linking factor 4.63 to adopt the new series in DA calculation. Thus the Base Index Number 115.76 was arrived

3. For 7th Pay Commission what will be the Base Index…?

As the 7th Pay commission recommendations will be implemented with effect from 1.1.2016, the AICPIN average of 2005 will be the Base Index for calculation of DA for 7th Pay Commission

So formula for Calculation of DA in 7th Pay Commission is

Now expectation turned towards January 2017 DA. We need 12 Months AICPIN from January 2016 to December 2016 to calculate the expected DA from January 2017. The 7 month AICPIN Points released so far is given below.

January :269
February :267
March :268
April :271
May :275
June :277
July :280

Remaining Five months AICPIN Points from August to December are Required to calculate the rate of DA from January 2017. But assuming the trend of AICPIN Index by following three possibilities we can arrive the percentage of increase in Dearness Allowance approximately.

Assumption 1

If the AICPIN for Industrial workers remain stationary at 280 for next five months

The increase in DA from January 2017 will be 5 %

So the Total DA to be paid to CG staff from January 2017 will be 7%

Assumption II

If the CPI Index fluctuates between 282 to 278 points, even then there will be an increase of 5% DA from Jan 2017

Assumption III

If the AICPIN increases steadily by 2 points for successive months from August 2016 to December 2016

Then the DA to be paid from January will be enhanced by 6 %

So the trend of AICPIN Index if goes with above expectation, 5% to 6% increase can be expected in DA from January 2017.

Via : gservants.com

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Expected DA from January 2016 likely to change the Fitment Factor of 7th CPC

At the end of the Sixth CPC Regime all the Central Government servants are at the verge of receiving their last installment of Dearness Allowance in Sixth Pay Commission. Almost the DA from January 2016 will be finalized after the release of AICPIN for the month of December 2015. The eleven months AICPIN Points released from January 2015 to November 2015 by Labour Bureau suggests that there is a possibility to get 6 to 7 percent hike in DA from January 2016. But the AICPIN for the Month of December will determine the exact rate of hike in Dearness Allowance from Jan 2016.

The rate of DA, as expected by 7th Pay commission, if arrived at 125 % with 6% hike there will be no change in Fitment factor. Because the Fitment Factor 2.57 is arrived by adding the 125% DA, at the rate anticipated on 1.1.2016. If AICPIN for December 2015 necessitates changing the expected DA from 125% to the level of 126 % with hike of 7%, then there will be certainly an impact in the Fitment Factor of 7th CPC. In that case, there will be change in decimals of fitment factor

So, Expected DA from January 2016 will play vital role in determining Fitment Factor if it increases from expected level of 125% to 126%.

What will be the fitment factor if DA reaches at 126% from January 2016.

When it was anticipated that the DA will be 125 % from January 2016, The 7th Pay Commission stated in the Report that

“This fitment factor of 2.57 is being proposed to be applied uniformly for all employees. It includes a factor of 2.25 on account of DA neutralization, assuming that the rate of Dearness Allowance would be 125 percent at the time of implementation of the new pay. Accordingly, the actual raise/fitment being recommended is 14.29 percent”

If 126% of DA has to be taken into account for arriving Fitment factor with the recommended 14.29 % increase..

The Revised Fitment Factor will be as follows

The fitment factor after DA neutralization = 2.26

Increase of 14.29% over 2.26 = 0.32

Total (2.26+0.32) = 2.58

So the fitment factor for arriving revised pay will be 2.58 as in case of the DA reaches 126% from January 2016

Let us wait for the release of AICPIN for the Month of December 2016..

Source : http://govtstaffnews.in/

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