Dearness Allowance rises to 107% from July 1, 2014 onwards..!

 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%.

Additional DA from July 2014 : Dearness Allowance rises to 107% from July 1, 2014 onwards..!

The Dearness Allowance for Central Government employees and pensioners may increase to 107% from July 1, 2014 onwards.

Following the increase in the CPI(I-W) BY 2001 = 100 price index, the twice-every-year Dearness Allowance that is issued to the Central Government employees, the second additional Dearness allowance may possible to  increase to 107% from 01.07.2014 onwards.

Last week, the Labour Bureau released the Consumer Price Index for Industrial Workers Base Year 2001=100 for the month of May 2014. The number now stands at 244, following a 2-point increase from the previous month, reflecting a 0.83% hike in prices. Another reason for the increase in number is the 1.65% consolidated rise in price of food groups.  Rice, Coconut Oil, Fish Fresh, Poultry, Milk, Onion, Vegetables & Fruits, Sugar, Cigarette, Electricity Charges, etc. are responsible for the increase in index. However, this increase was restricted to some extent by Petrol putting downward pressure on the index.

The year-on-year inflation measured by monthly CPI-IW stood at 7.02 per cent for May, 2014 as compared to 7.08 per cent for the previous month and 10.68 per cent during the corresponding month of the previous year. Similarly, the Food inflation stood at 7.66 per cent against 7.76 per cent of the previous month and 13.24 per cent during the corresponding month of the previous year.

The below table is clearly indicated the movement of AICPIN with increasing additional Dearness allowance month wise…

AICPIN for the month of May 2014 begged at 244

Month/ Year	AICPIN (IW) Base Year 2001=100	Increased/ Decreased Points in AICPIN	Total Points Increased	Total of 12 Months	12 Months Average	% Increase over 115.763	Approximate DA	Total DA %	DA% Increase Month wise
Jan-14	237	-2		2802	233.5	117.74	101.71	101	1
Feb-14	238	1		2817	234.75	118.99	102.79	102	2
Mar-14	239	1		2832	236	120.24	103.86	103	3
Apr-14	242	3	3	2848	237.33	121.57	105.02	105	5
May-14	244	5	5	2864	238.67	122.91	106.17	106	6