DA from July 2016 set to
increase by 6% or 7% for pre-revised
On the basis of All India
Consumer Price Index for the period from July 2015 to April 2016 and assumed
indices for May and Jun 2016, DA for Central Government Employees in
Pre-revised pay (6th CPC) and DA from July after implementation of 7th Pay
Commission have been estimated.
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, for Pre revised Pay (Pay prior implementation
of 7th Pay Commission)
DA from July 2016 – An analysis – Labour
Bureau, Govt of India has released the Consumer Price Index (IW) for the month
of April 2016.
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, DA from July
2016 after implementation of 7th Pay Commission has to be calculated using the
following DA Calculation Formula
[ (Average of Consumer Index for the period from July -2015 to Jun-16) – (Average All India Consumer Price Index for 2015) X 100] / Average All India Consumer Price Index for 2015
Based on the above formula,
after merger of DA of 125% with Basic Pay, DA from January 2016 would be
calculated as 0% and Likely DA from July 2016 after implementation of 7th Pay
Commission will be 2% or 3%
DA FROM JULY 2016 FOR
PRE-REVISED PAY
CPI-IW FROM JULY 2015 TO
APRIL 2016
Month
|
Actual AICPI-IW
|
July-2015
|
263
|
Aug-2015
|
264
|
Sep-2015
|
266
|
Oct-2015
|
269
|
Nov-2015
|
270
|
Dec-2015
|
269
|
Jan-2016
|
269
|
Feb-2016
|
267
|
Mar-2016
|
268
|
Apr-2016
|
271
|
May-2016
|
yet to be released
|
Jun-2016
|
yet to be released
|
SCENARIO 1: POSSIBILITY OF INCREASE IN DA FROM JULY 2016 FOR PRE-REVISED PAY 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
FOR PRE-REVISED PAY 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
FOR PRE-REVISED PAY 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
FOR PRE-REVISED PAY 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%
Source: gconncect.in