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

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