Expected DA from January 2015 – The Next Episode Begins…!

Expected DA from January 2015 – The Next Episode Begins…!

The Centre has announced a  hike of 7% Dearness Allowance and Dearness Relief for Central Government employees and Pensioners, with effect from July 2014 on 4th of this month. Soon, Finance Ministry will issue appropriate orders for payment of Dearness allowance to all. As and when orders are published by the Ministry of Finance, we will be posted in our website immediately.

According to the fluctuation of price index past six months from Jan to Jun 2014, the additional Dearness allowance has been arrived as 7% only. It seems there are a few employees who are unhappy with the single-digit number because until then they have been getting double-digit DA hikes.

The disappointment also reflects the high expectations that people have from the Modi government. Our readers have been raising a number of questions in this regard. While the previous Manmohan Singh government had twice given them DA hike of 10%, why has Modi government given them only 7% increase?

First of all, the ruling party at the Centre has no direct impact on the DA calculations. DA is calculated on the basis of AICPIN points, which are based on price rise.

The current system of DA calculations, which is being done as per the recommendations of the 6th Pay Commission, will come to an end after two more instalments (Jan 2015 and July 2015). Recommendations of the 7th Pay Commission are expected to come into effect from Jan 2016 onwards.

Now, the next episode begins…’Expected DA from January 2015′

It is highly unlikely that there will be a two-digit DA hike in the next two instalments (January 2015 and July 2015). Kindly keep in mind the fact that despite a 6 point increase of the AICPIN from 246 to 252 for the month of July 2014, there was hardly an impact. Even if it increases by 3 points over the next five months, the DA would increase to 9% only. It is impossible for AICPIN to constantly increase in future.

We believe that, under current circumstances, the next installment of additional Dearness allowance from Jan 2015 hike would only be about 6 or 7%.

We have analyzed the impact of CPI number on increasing DA and given below a table to express the same for your information…

 

Month/Year	CPI(IW) 2001=100	Points Increased	Total of 12 Months	12 Months Average	% Increase over 115.763	App. DA	DA %	DA Increased in %
July 2014	252	6	2896	241.33	125.57	108.47	108	1.22

Month/Year	CPI(IW) 2001=100	Points Increased	Total of 12 Months	12 Months Average	% Increase over 115.763	App. DA	DA %	DA Increased in %
Jun-13	231	3	2648	220.67	104.91	90.62	90	1.66
Jul-13	235	4	2671	222.58	106.82	92.28	92	1.66
Aug-13	237	2	2694	224.50	108.74	93.93	93	1.66
Sep-13	238	1	2717	226.42	110.66	95.59	95	1.66
Oct-13	241	3	2741	228.42	112.66	97.32	97	1.73
Nov-13	243	2	2766	230.50	114.74	99.12	99	1.80

Source: CGEN.in

Expected DA July 2014 – Finally it concludes at 7%

Expected DA July 2014 – Finally it concludes at 7%

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/]