DA from July 2014 will be either 106% or 107% – Estimation

DA from July 2014 will be either 106% or 107% – Estimation of Dearness Allowance from July 2014 for Central Government Employees and Pensioners

Consumer Price Indices for the months from July 2014 to February 2014 are available now. We need CPI (IW) for four more months i.e from March 2014 to June 2014 to determine the Dearness Allowance payable to Central Government Employees and Pensioners with effect from 1st July 2014

Month Actual AICPI-IW
July 2013 235
Aug 2013 237
Sep 2013 238
Oct 2013 241
Nov 2013 243
Dec 2013 239
Jan 2014 237
Feb-2014 238
Mar-2014 Yet to be released
Apr-2014 Yet to be released
May 2014 Yet to be released
Jun 2014 Yet to be released

As we do not have actual figures of Consumer Price Index for the coming 4 months, it might seem to be too early to estimate DA from July 2014. Still we thought of doing this exercise, due to peculiar trend in consumer price index this time. Increase in All India CPI (IW) from July 2014 was almost steady which could be seen from the above table (From 235 in the month of July 2014 to 243 in the month of November 2013). However, after November 2013, we could find significant fall in CPI (IW) and the same is pegged at 238 which is equal to CPI in the month of September 2013. In the month of December 2013 alone CPI has decreased 4 points, the case which we have not seen in the recent past.

It will be apt if we discuss 3 Scenarios this time on the trend in Consumer Price Index for the purpose of estimating DA for Central Government Employees and pensioners from July 2014

Scenario 1 – More Inflation in the coming months

Month expected CPI (IW)
Mar-2014 240
Apr-2014 242
May 2014 244
Jun 2014 246

Estimated DA from July 2014 = ((235+237+238+241+243+239+237+238+240+242+244+246)/12)-115.76)*100/115.76

= 107 % (Rounded to nearest Integer at the lower side)

If the Consumer Price Index for these 4 months increases steadily at the rate of 2 points for each month, DA from July 2014 will be 107 %

Scenario 2 – Inflation at the same level recorded in the month of February 2014

Month expected CPI (IW)
Mar-2014 239
Apr-2014 240
May 2014 241
Jun 2014 242

Estimated DA from July 2014 = ((235+237+238+241+243+239+237+238+239+240+241+242)/12)-115.76)*100/115.76

= 106 % (Rounded to nearest Integer at the lower side)

In this Scenario, CPI for the coming 4 months is set to increase at 1 point for each month. Then DA from July 2014 will be 106%

Scenario 3 – No inflationary trend in the coming 4 months

Month expected CPI (IW)
Mar-2014 238
Apr-2014 238
May 2014 238
Jun 2014 238

Estimated DA from July 2014 = ((235+237+238+241+243+239+237+238+238+238+238+238)/12)-115.76)*100/115.76

= 105 % (Rounded to nearest Integer at the lower side)

It is assumed that there will be no change in Consumer Price Index (IW) from March 2014 to June 2014 and it will be at the same level recorded in February 2014. Such a kind of no inflationary trend, would fetch Central Government Employees and Pensioners 5% increase in the DA from July 2014.

Estimated Dearness Allowance from July 2014

Scenario 2 discussed above i.e Inflation at the same level recorded in the month of February 2014 seems to more realistic. At the same time, possibility of Scenario 3 coming to reality can not be fully ruled out. In other words, we may also expect two point increase in CPI (IW) for each month in the coming four months. Considering there estimations, DA from July 2014 will either be 106% or 107%.

Note : The above calculation of DA from July 2014, is only an estimation. Actual DA rate with effect from July 2014 will be announced by Government in the month of September or October 2014

GConnect DA Calculator to estimate DA from July 2014

DA Estimation for different scenarios can be easily made using the following DA Calculator. This Tool is most popular among Central Government Employees and Pensioners to estimate Dearness Allowance.

Get the month wise All India Consumer Price Index (Industrial Workers) from the following Labour Bureau, Government of India

Month wise All India CPI (IW)

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