Until the 6th CPC, the Dearness Allowance didn’t increase by more than 1 or 2%. It was only after the 6th Pay Commission that it began to increase substantially. With the skyrocketing prices of essential commodities, Dearness Allowance too began to rise. Twice, it touched double digits. In July 2013 and Jan 2014, within 12 months the DA has leapt on to the 100%. We cannot forget that the each instalment gave 10%. Then, it slumped.

Dearness Allowance, which is given once every six months, is likely to be 6% hike from January 2015. This is 1% less than the previous hike of additional DA from July 2014. The total DA from Jan 2015 will become 113%.

As soon as the first instalment is confirmed, expectations will start growing about the second instalment, i.e., ‘Expected Da from July 2015‘. The second instalment of the year will cover the months between July and December 2015. This will be the last time that the DA hike will be calculated based on the method recommended by the 6th Pay Commission. DA of 2016 will be calculated based on the recommendations made by the 7th Pay Commission.

7th Pay Commission on DA Calculation..? Is there any possible to change in the method of calculation..?

First, we have to know about the calculation of Dearness Allowance…

How DA is calculated..?
Month Year /  CPI(IW) BY 2001=100 / Total / Average / App. DA / DA%

First is the month and year. Then the CPI (IW) Base Year 2001=100 and the relevant data. In the next column, you have the sum total of all the 12 months, i.e., the total of the declared AIPCIN numbers for the past 12 months. Next comes the division of the sum total by 12.

The next step is the most crucial one. You will have to find out by how much it exceeds 115.76. You will have to calculate the excess as percentage of 115.76.

(12 Monthly Average) – 115.76
————————————————–  X  100 = Percentage increase in prices
115.76

Source: http://7thpaycommissionnews.in/

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It looks as if there is scarcely any curiosity among Central Government employees to know about the next DA hike percentage. With just about everybody trying to predict the percentage hike, the topic has lost its novelty. Moreover, with DA increase not amounting to anything much, the curiosity to know has also nosedived.

Consumer Price Indices (CPI) measure changes over time in general level of prices of goods and services that households acquire for the purpose of consumption. CPI is widely used as a macroeconomic indicator of inflation, as a tool by governments and central banks for inflation targeting and for monitoring price stability, and as deflators in the national accounts. CPI is also used for indexing dearness allowance to employees for increase in prices.

There is huge change in CPI (General) and CFPI, have a look the comparison table is given below…

November’s AICPIN number will be announced next week. The index, which stood nailed to its spot for the past three months, is actually expected to fall this time.

Therefore, no matter which direction the AICPIN moves, the DA hike this time is not likely to go beyond 6%.

Source: http://7thpaycommissionnews.in

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Expected DA from Jan 2015 is on fourth step, no change in the index of CPI(IW) for the month of October 2014, stands at 253 only.

Increase in Dearness allowance for Central Govt employees and Pensioners from Jan 2015 is likely to be 6% and the total Dearness allowance will go up to 113%.

When comparing with previous instalments of additional DA, this is some what low. In July 2013 and Jan 2014, both the installments was in double digit.

After this DA, there will be only another instalment in July 2015 which is the last instalment of additional DA in Sixth Pay Commission. And the first installment for the year 2016, the DA calculation may be change with the recommendations of 7th CPC.

The below table describes the position of AICPIN with DA Calculation…

Source: http://7thpaycommissionnews.in

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Source: CGEN.in

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The Centre has announced an additional 7% DA hike for the Central Government employees and Pensioners from July 2014.

Usually, agendas for central government employees’ DA hike are presented at the Cabinet meeting only on the third or fourth Thursdays of the month. There are times when these decisions were made during the last cabinet meeting of the season. Sometimes, these decisions are not made even during the last meeting and are taken up only during special meeting or at critical times.

On the 4th of this month, out of the blue, the Government announced a 7% DA hike. The cabinet’s announcement gives a positive conclusion to the relentless waiting of the past few weeks.

DA is calculated twice a year (from January to June, and from July to December) based on the changes in the Consumer Price Index (IW) BY 2001=100. The AICPIN numbers of the month are released by the Labour Bureau the following month.

In the month of August, the Labour Bureau sends the AICPIN data for the months of January to July, to the Finance Ministry. Based on the data, the Finance Ministry calculates the DA hike and the additional expense likely to be incurred, and presents the findings and reports towards the end of August to the Cabinet for its approval. The final decision is made in the month of September. This is the usual procedure.

Irrespective of the date of the Cabinet approval in the month of September, the DA hikes are calculated and given along with the salary for the month of September. Increase for the month of July and August are calculated and given as arrears to the employees and pensioners too.

Although 7% hike has been confirmed already, the prompt decision is worth appreciating!

Source : www.cgstaffnews.in

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No. 5/1/2014-CPI
GOVERNMENT OF INDIA
MINISTRY OF LABOUR & EMPLOYMENT
LABOUR BUREAU

`CLEREMONT’, SHIMLA-171004
DATED: the 29th August, 2014

Press Release

Consumer Price Index for Industrial Workers (CPI-IW) – July, 2014

The All-India CPI-IW for July, 2014 increased by 6 points and pegged at 252 (two hundred and fifty two). On 1-month percentage change, it increased by 2.44 per cent between June, 2014 and July, 2014 when compared with the rise of 1.73 per cent between the same two months a year ago.

The largest upward pressure to the change in current index came from Food group contributing 4.42 percentage points to the total change. The House Rent index further accentuated the overall index by 1.08 percentage points. At item level, Rice, Eggs, Milk, Onion, Chillies Green, Tomato, Potato and other Vegetables & Fruits, Sugar, Tea (Readymade), Pan Finished, Doctors’ Fee, College Fee, Petrol, Rail Fare, etc. are responsible for the increase in index. However, this increase was restricted to some extent by Wheat, Soft Coke, Medicine (Allopathic), etc., putting downward pressure on the index.

The year-on-year inflation measured by monthly CPI-IW stood at 7.23 per cent for July, 2014 as compared to 6.49 per cent for the previous month and 10.85 per cent during the corresponding month of the previous year. Similarly, the Food inflation stood at 8.11 per cent against 5.88 per cent of the previous month and 14.10 per cent during the corresponding month of the previous year.

At centre level, Nagpur recorded the maximum increase of 12 points followed by Ludhiana (10 points). Among others, 9 points rise was observed in 7 centres, 8 points in 3 centres, 7 points in 9 centres, 6 points in 23 centres, 5 points in 14 centres, 4 points in 10 centres, 3 points in 4 centres, 2 points in 4 centres and I point in 2 centres.

The indices of 35 centres are above and other 41 centres are below national average. The indices of Ernakulam and Varanasi are at par with all-India index.

The next index of CPI-IW for the month of August, 2014 will be released on Tuesday, 30 September, 2014. The same will also be available on the office website www.labourbureau.gov. in.

(S.S.NEGI)
DIRECTOR

Source: www.labourbureau.gov.in

DA TABLE  – DEARNESS ALLOWANCE TABLE

2008

2009

2010

2011

2012

2013

2014

Via: CGEN.in

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As anticipated by all, the expected DA from July 2014 concluded at 7%.

With the announcement of the AICPI(IW) points for the month of June, the calculation of the additional dearness allowance for central government employees and pensioners from July onwards have ended. The percentage of Dearness allowance and Dearness relief to be paid from July 2014 will be increased by 7%.

Based on the recommendations of the 6th Central Pay Commission, in order to meet the rising expenses of essential commodities and inflation, dearness allowance is given twice every year to the central government employees – from January to June and from July to December – calculated on the basis of the All India Consumer Price Index of Industrial Workers Base Year 2001=100.

The most recently released AICPIN points for the month of June have increased by two and now stands at 246. Since the AICPIN points have increased by two, the dearness allowance percentage arrived at 107.25, is to be calculated, after ignoring the decimal points, as 7%. This will be officially announced by the Central Government after approval of Unionn Cabinet committee in the month of September.

The last two installments, 10% dearness allowance was being paid to the employees. Many wonder why it has come down to 7% this time. There are two main reasons for this, one is AICPIN points, and another is the method of calculating DA. One has to also keep in mind the fact that dearness allowance of 10% was also given based on the same calculations.

The fact is, the next two additional dearness allowances (Expected DA from January 2015, and expected DA from July 2015) are not likely to cross 5%.

The method of calculating dearness allowance is given in detail in the table below:

Source: CGEN.in

[http://centralgovernmentemployeesnews.in/2014/08/expected-da-july-2014-finally-it-concludes-at-7/]

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