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Tuesday, May 8, 2018

DA from July 2018 – 2% or 3% increase Expected

DA from July 2018 – 2% or 3% increase Expected – Estimated DA with effect from July 2018 will be 9% or 10% – Suggestion based on actual Consumer Price Index for 9 months and estimated CPI for 3 months

Central Government Employees including Railway Employees, Defence Personnel and all Central Services and Defence Pensioners are paid dearness allowance at the rate of 7% with effect from January 2018.
Finance Ministry DA orders for Dearness Allowance with effect from 1st January 2018
We have attempted to estimate DA from July 2018 in this article.
Dearness Allowance payable with effect from 7th CPC Basic Pay = (Avg of CPI-IW for the past 12 months – Average of CPI-IW recorded in 2015)*100/(Average of CPI-IW recorded in 2015)

New DA Calculator for calculating Dearness Allowance payable on 7th CPC Basic Pay:

Taking in to account, the revised DA Calculation Formula we have now come up with a new 7th Pay Commission DA Calculator.

DA from 1st July 2018:

We need AICPI (IW) (All India Consumer Price Index (Industrial Workers) for the months from July 2017 to June 2018 to determine Dearness Allowance with effect from July 2018. Actual Consumer Price Index for the months from July 2017 to March 2018 which are already available are tabulated as follows.
Month Actual AICPI-IW
July-2017 285
Aug-2017 285
Sep-2017 285
Oct-2017 287
Nov-2017 288
Dec-2017 286
Jan-2018 288
Feb-2018 288
Mar-2018 287
Apr-2018 To be released
May-2018 To be released
Jun-2018 To be released
With actual CPI for the months from July 2017 to March 2018 and estimated CPI from April 2018 to June 2018, we have to determine DA from July 2018.

Expected DA from July 2018 : Estimation : 1

A conservative estimation of keeping CPI as 287 from April 2018 to June 2018, which was recorded in the month of March 2018 gives us an increase of 2% in DA from July 2018.
DA with effect from 1st July 2016 = [ (285+285+285+287+288+286+288+288+287+287+287+287)/12]-(261.4)X100/261.4

= 9 % (increase of 2% from the present DA of 7%)

 Expected DA from July 2018 : Estimation : 2

We need at least 2 point increase in consumer price index in all the three months from April 2018 to June 2018, to get 3% increase in DA with effect from July 2018
DA with effect from 1st July 2016 = [ (285+285+285+287+288+286+288+288+287+289+291+293)/12]-(261.4)X100/261.4

= 10 % (increase of 3% from the present DA of 7%)
Considering the previous Trend in Consumer Price Index, Chances for Estimation 1 is higher than Estimation 2 as CPI should increase 2 points each in all the coming months in the case of later.
On the lower side, 1% increase in DA is possible only if 3 point decrease in consumer price index for the month from April 2018 and May 2018 followed by 4 point decrease in the month of June 2018. Decrease in CPI to such an exteent is not possible considering the inflationary trend due rise in fuel prices.

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