How Dearness Allowance increase is calculated..?

How to calculate Dearness Allowance for Central Government Staff and Employees…

We have been reporting the increase in Dearness allowance every six months, always before official announcement is made. We have not been making predictions or assumptions. Our reporting has always been based on standard calculation used for the purpose. We feel that the visitors also should be aware of the calculation, hence this article.

The Dearness allowance is based on All India Consumer Price Index. The Dearness allowance is granted to compensate the price increase above 536 points (Base Year 1982=100) [115.763 Points (Base Year 2001=100)], to which the revised pay scales relate. This will be approved twice a year, payable from 1st January and 1st July. The twelve monthly average CPI above 536/115.763 points is determined twice in a year for the period ending December and June.

For arriving at Dearness allowance increase we need to know the All India Consumer Price Index for Industrial Workers [CPI(IW)] for the previous six months. For Dearness allowance revision w.e.f 1st January of a year, the CPI of July to Dec are required. For Dearness allowance revision w.e.f. 1st July of a year, CPI of Jan to Jun are required and so on.

The average CPI of the twelve months is then taken for calculation and the following formula is used :

New rate of Dearness allowance = (Average CPI for 12 months – 115.763 x 100) / 115.763

Additional rate of Dearness allowance = New DA rate – Old DA rate

The All India Consumer Price Index Numbers will be notified by the Labour Bureau on the last day of next month on its official website.

Example as follows…

AICPIN for the months for

Jul-11 193

Aug-11 194

Sep-11 197

Oct-11 198

Nov-11 199

Dec-11 197

Jan-12 198

Feb-12 199

Mar-12 201

Apr-12 205

May-12 206

Jun-12 208

Total = 2395

Average = 199.58

Calculation as follows…

2395 – 115.763 x 100

---------------------------- = 72.41

115.763

The total Dearness allowance with effect from Jan 2012 will be 72%.

Source: www.cgstaffnews.com

[http://cgstaffnews.com/?page_id=8025]