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ANNOUNCEMENT

Jun 3, 2016

DA from July 2016 set to increase by 6%or 7%

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
MonthActual AICPI-IW
July-2015263
Aug-2015264
Sep-2015266
Oct-2015269
Nov-2015270
Dec-2015269
Jan-2016269
Feb-2016267
Mar-2016268
Apr-2016271
May-2016yet to be released
Jun-2016yet to be released
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
DA from July 2016=[(263+264+266+269+270+269+269+267+268+271+267@+264@)-115.76]X100/115.76
=130% (5% increase in DA from July 2016)
@ Assumed CPI(IW) for May 2016 and June 2016
DA from July 2016=[(263+264+266+269+270+269+269+267+268+271+268@+264@)-115.76]X100/115.76
=130%-125% (5% increase in DA from July 2016)
@ Assumed CPI(IW) for May 2016 and 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%.
DA from July 2016=[(263+264+266+269+270+269+269+267+268+271+268@+265@)-115.76]X100/115.76
=131% -125% (6% increase in DA from July 2016)
@ Assumed CPI(IW) for May 2016 and June 2016 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%
DA from July 2016 =[(263+264+266+269+270+269+269+267+268+271+273@+274@)-115.76]X100/115.76
=132% -125% (7% increase in DA from July 2016)
@ Assumed CPI(IW) for May 2016 and June 2016
DA from July 2016 =[(263+264+266+269+270+269+269+267+268+271+272@+273@)-115.76]X100/115.76
=132% -125% (7% increase in DA from July 2016)
@ Assumed CPI(IW) for May 2016 and June 2016 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%
Readers can make use of GConnect DA Calculator available here to verify the above calculations.

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கல்விச்செய்தி நண்பர்களே..
நீங்கள் ஒவ்வொருவரும் கல்விச்செய்தியின் அங்கமே..
வாசகர்களின் கருத்து சுதந்திரத்தை வரவேற்கும் இந்தப்பகுதியை ஆரோக்கியமாக பயன்படுத்திக் கொள்ள அன்புடன் வேண்டுகிறோம்.

குறிப்பு:
1. இங்கு பதிவாகும் கருத்துக்கள் வாசகர்களின் சொந்த கருத்துக்களே. கல்விச்செய்தி இதற்கு எவ்வகையிலும் பொறுப்பல்ல.
2. கருத்தை நிராகரிக்கவோ, குறைக்கவோ, தணிக்கை செய்யவோ கல்விச்செய்தி குழுவுக்கு முழு உரிமை உண்டு.
3. தனிமனித தாக்குதல்கள், நாகரிகமற்ற வார்த்தைகள், படைப்புக்கு பொருத்தமில்லாத கருத்துகள் நீக்கப்படும்.
4. தங்களின் பெயர் மற்றும் சரியான மின்னஞ்சல் முகவரியை பயன்படுத்தி கருத்தை பதிவிட அன்புடன் வேண்டுகிறோம்.
-அன்புடன் கல்விச்செய்தி