“Expected DA Jan 2016” gets carefully scrutinized by the 7th Pay Commission

"This time, it is not just the employees, but the members of the 7th Pay Commission too who are very eager to know about the Dearness Allowance from January 2016. "

'Expected DA January 2016' has the honour of making not just the Central Government employees and pensioners curious; it has even got the 7th Pay Commission on the list of eagerly waiting audience. 

It is a well-known fact that Central Government employees love to read all kinds of information, analyses, orders, and predictions about the Dearness Allowance. Here are our fact- and trend-based predictions for the additional Dearness Allowance which will be announced from 01.01.2016. 

Calculation of DA : The Government of India presently calculates the level of inflation for purposes of grant of dearness allowance to Central Government Employees on the basis of the All India Consumer Price index Number for Industrial Workers (2001=100) (AICPI). The twelve monthly average of the AICPI (2001 base) as on 1st January and 1st July of each year is used for calculating the Dearness Allowance (DA).

Each month, the Central Government’s Labour Bureau releases price-related data called the CPI (IW) on Base Year 2001=100. 78 important cities and towns from all over the country were selected and the fluctuations in prices of essential commodities in all these places are noted. Based on these data, the points, abbreviated as AICPIN, are calculated. The Pay Commission will, in its report, explain in detail how the DA is calculated based on these statistics, known as the ‘DA Determination Formula.’

The Dearness Allowance of not just the Central Government employees, but also the state government employees, is being paid as per the method prescribed by the 6th Pay Commission. The DA calculation method was implemented from January 2006 and will continue to be in effect for ten years, until December 2015. This DA determination method comes to an end now due to the constitution of the 7th Pay Commission.

Implementation of 7th CPC : The 7th Pay Commission is expected to submit its recommendations to the government before December 2015. Its recommendations are expected to be implemented from January 2016 onwards. 

Dearness Allowance after 1.1.2016 : After 01.01.2016, Dearness Allowance will be issued based on the prices of essential commodities, as per the method recommended by the 7th Pay Commission. For example, the 6th Pay Commission’s recommendations were implemented from January 2006 onwards. The DA for the months of January 2006 to June 2006 was not paid. DA was issued only from the month of June 2006. 

DA Calculation Method of the 7th Pay Commission : Successive Pay Commissions have made changes to the DA formula, suggesting their own methodology for determining the quantum and frequency. The 7th Pay Commission will also expected to recommend a different methodology to determine the DA.

One cannot say for sure that the 7th Pay Commission will follow the method that was recommended by the 6th Pay Commission. It could modify the current CPI(IW) BY 2001-100 statistics index. It could also change the current “Linking Factor 115.76” method. It is difficult to predict how these factors would differ in the recommendations of the 7th Pay Commission report. 

Expected DA January 2016 : The Dearness Allowance from January 2016 will be calculated based on the AICPIN points for the six months starting from July 2015. The AICPIN points of only three months have been released as of now. Expected DA for January 2016 can be calculated only after the AICPIN points of October, November and December are released. On a fair guess, assuming that the AICPIN points remain the same for the remaining three months, one can expect Dearness Allowance of 6 percent and the total Dearness Allowance will increase by 125 percent. Unless there is a dramatic change in the AICPIN points, the total Dearness Allowance will very likely be around 125 percent. 

The relationship between the 7th Pay Commission and the DA : The quantum of Dearness Allowance mentioned above is an important aspect for 7th Pay Commission. It is based on this number that the much awaited Revised Basic Pay will be calculated. For instance, the amount of total DA percentage will be added to the current Basic Pay and to this, the weightage to be reommended by the 7th Pay Commission will be added and the new Basic Pay will be arrived at. 

The AICPIN points for the month of December 2015 will be released only in January 2016. Only then will it be possible to accurately calculate the Dearness Allowance from January 2016.

The 7th Pay Commission is expected to submit its report to the Central Government by December 2015. It remains to be seen how the 7th Pay Commission has calculated the final Dearness Allowance percentage.

Source: 90paisa.blogspot.in