Calculation starts for expected DA from January 2017

Expected DA Calculation starts from January 2017

People started to calculate expected DA from January 2017 as 7 Months AICPIN Points are released so far. The Labor Bureau has released Consumer Price Index Numbers for Industrial Workers for the Month of July 2016 today. Already It is confirmed that Dearness Allowance from July 2016 might be 2% as per the revised DA calculation.

Now, see the 7th CPC DA calculation Formula.

DA calculation Expected DA from July 2016 in Sixth and 7th Pay Commission

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

1. From 1996 onwards, the average base Index was 306.33 (with base 1982=100)

How 306.33 was arrived?
To calculate the DA in Fifth pay commission, the 12 Month Average of AICPIN for the year 1995 was taken. The 12 months AICPIN Average of 1995 was 306.33
2. From 2006 onwards, the Avarage Base Index is 115.76 (with Base 2001 = 100)

How 115.76 was arrived…?
The Government has developed a new series with base 2001, with effect from January 2006. Back data series with base 2001 can be generated using linking factor 4.63
So the AICPIN Average of 2005 (with base 1982=100) i.e 536 had to be modified using linking factor 4.63 to adopt the new series in DA calculation. Thus the Base Index Number 115.76 was arrived

3. 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

Now expectation turned towards January 2017 DA. We need 12 Months AICPIN from January 2016 to December 2016 to calculate the expected DA from January 2017. The 7 month AICPIN Points released so far is given below.

January :269
February :267
March :268
April :271
May :275
June :277
July :280

Remaining Five months AICPIN Points from August to December are Required to calculate the rate of DA from January 2017. But assuming the trend of AICPIN Index by following three possibilities we can arrive the percentage of increase in Dearness Allowance approximately.

Assumption 1
If the AICPIN for Industrial workers remain stationary at 280 for next five months
The increase in DA from January 2017 will be 5 %
So the Total DA to be paid to CG staff from January 2017 will be 7%

Assumption II

If the CPI Index fluctuates between 282 to 278 points, even then there will be an increase of 5% DA from Jan 2017

Assumption III
If the AICPIN increases steadily by 2 points for successive months from August 2016 to December 2016
Then the DA to be paid from January will be enhanced by 6 %
So the trend of AICPIN Index if goes with above expectation, 5% to 6% increase can be expected in 
DA from January 2017.

Via : gservants.com