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How to Calculate Dearness Allowance for Central Government Employees and Pensioners after implementation of 7th Pay Commission?

Now that, 7th Pay Commission recommendations has been implemented with effect from 1st Jan 2016. Though 7th Pay Commission has recommended for using the same series of Consumer Price Index (Industrial Workers) with Base 2001=100, DA Calculation formula used for 6th CPC Pay will have to be revised as DA to the extent of 125% will be merged with Basic Pay on implementation of 7th Pay Commission recommendations.

In other words, DA on 7th CPC Pay with effect from 1st January 2016 will be reset to 0%.

New DA Calculation Formula based on CPI (IW) after 7th Pay Commission implementation will be as follows.

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.

How to Calculate DA from 1st January 2016?

We have all the actual Consumer Price Indices from January 2015 to December 2015 based on which DA from Jauary 2016 is calculated to be 0%

DA with effect from 1st January 2016 = [261.4]-(261.4)X100/261.4
=0%

 

Like wise the latest DA Estimation, i.e DA from  July 2019 is as follows

Consumer Price Index from July 2018 to April 2019 is as follows.

Month Actual AICPI-IW
Jul-2018 301
Aug-2018 301
Sep-2018 301
Oct-2018 302
Nov-2018 302
Dec-2018 301
Jan-2019 307
Feb-2019 307
Mar-2019 309
Apr-2019 312
May-2019 Yet to be Released
Jun-2019 Yet to be Released

 

What will be the DA from July 2019 if CPI remained at 312 in the remaining two months ?

In that case, increase in DA from July 2019 will be 4% and all Central Government Employees including Railway Employees, Defence Personnel and Pensioners will be entitled to Dearness Allowance of 16% with effect from July 2019.

Calculation of DA using the above data is as follows:

DA with effect from 1st July 2019 = [ (301+301+301+302+302+301+307+307+309+312+312+312)/12]-(261.4)X100/261.4
= 16 % (increase of 4% from the DA of 9% w.e.f July 2018)

 

If the inflationary trend in Consumer price index that exists from January 2019 continues, there is a possibility of CPI moving to 314 in the month of May 2019 and June 2019. In that case, DA from July 2019, will be 17% which 5% increase from the current level of DA.

DA with effect from 1st July 2019 = [ (301+301+301+302+302+301+307+307+309+312+314+314)/12]-(261.4)X100/261.4
= 17 % (increase of 5% from the DA of 9% w.e.f July 2018)

 

There is a very remote chance of getting increase in DA from July 2019 less than 4%, as this Scenario is possible only if All India Consumer Price Index decrease by 15 points and move to 297 in the month of May 2019 and remained at the same level or record only one point increase in June 2019 and move to 298.

DA with effect from 1st July 2019 = [ (301+301+301+302+302+301+307+307+309+312+297+298)/12]-(261.4)X100/261.4
= 15 % (increase of 3% from the DA of 9% w.e.f July 2018)