EXPECTED D.A. FROM JULY 2016 - DEARNESS ALLOWANCE CALCULATION

There are three main factors which determine the increase in percentage of DA in every pay Commission.

1.DA CALCULATION FORMULA
2.AICPIN FOR INDUSTRIAL WORKERS
3. BASE AVERAGE INDEX

1. FORMULA FOR DA CALCULATION

2. AICPIN for Industrial Workers

THE CONSUMER PRICE INDEX FOR INDUSTRIAL WORKERS (CPI-IW) IS AN IMPORTANT STATISTICAL/ECONOMIC INDICATOR. IT WAS FIRST INTRODUCED ON SCIENTIFIC LINES WITH BASE 1960=100 WHICH WAS BASED ON THE RESULTS OF FAMILY LIVING SURVEY CONDUCTED IN 1958-59 AT 50 INDUSTRIALLY IMPORTANT CENTRES. THE SERIES WAS THEN, UPDATED ON BASE 1982=100 AND A REVISION IN 1999-2000 HAS FURTHER UPDATED THE BASE ON 2001=100. THE CURRENT SERIES OF CPI-IW WITH BASE YEAR 2001=100 COVERS 78 INDUSTRIALLY IMPORTANT CENTERS SPREAD ACROSS THE COUNTRY

3. Base Average Index

AFTER NEUTRALIZATION OF DA TO REVISE THE PAY AND ALLOWANCE IN EVERY PAY COMMISSION, THE BASE AVERAGE INDEX WILL BE MODIFIED TAKING INTO THE ACCOUNT OF 12 MONTHS AICPIN POINTS OF PREVIOUS YEAR TO NEUTRALIZATION OF DA.

FOR 7TH PAY COMMISSION WHAT WILL BE THE BASE INDEX…?

AS THE 7TH PAY COMMISSION RECOMMENDATIONS WILL BE IMPLEMENTED WITH EFFECT FROM 1.1.2016, THE AICPIN AVERAGE OF 2005 WILL BE THE BASE INDEX FOR CALCULATION OF DA FOR 7TH PAY COMMISSION

SO FORMULA FOR CALCULATION OF DA IN 7TH PAY COMMISSION IS

=  [(263+264+266+269+270+269+269+267+268+271+275+277)/12]-(261.4) X 100/261.4   = 2.91 %