DA Calculator for Central Government Employees – How to calculate Dearness Allowance?

How to Calculate Dearness Allowance for Central Government Employees and Pensioners after implementation of 7th Pay Commission and introduction new Consumer Price Index with base 2016=100?

DA for central government employees started from 0% with effect from 1st Jan 2016 by merging DA with basic pay.

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)

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%

 

Dearness Allowance for Central Government Employees was continued to be calculated after implementation of 7th Pay Commission based on consumer price index with Base 2001=100 till August 2020. From the month of September 2020, Govt replaced CPI with base 2001=100 with new consumer price index with base 2016=100.

Checkout this infographics on new CPI Series and how it affects Dearness Allowance of Central Government Employees?

Checkout press release issued by Labour Ministry for introduction of Consumer Price Index using new series with base 2016=100

With the introduction of new series, a linking factor will be required to bridge old series of CPI and new consumer price index for calculating DA for Central Government Employees and pensioners.

As per Govt’s press release, the maiden index on new base for September, 2020 stands at the level of 118 and linking factor for the conversion of new series index to previous series on base 2001=100 is 2.88.

This linking factor will have to be used to convert CPI (IW) announced by Government from September 2020. For example, Consumer Price Index with base 2016=100 for the month of September 2020 is 118.1 can be converted to CPI with base 2001=100 as 118.1 X 2..88 = 340.13 (rounded as 340 to the nearest whole number). Like wise, consumer price index for the subsequent months i.e from October 2020 are also to be calculated.

This calculation is given below.

Consumer Price Index from July 2020 to Dec 2020 :

MonthActual AICPI-IW
Jan 2020330
Feb 2020328
Mar 2020326
Apr 2020329
May 2020330
Jun 2020332
Jul 2020336
Aug 2020338
Sep 2020340
Oct 2020344
Nov 2020345
Dec 2020342

 

Calculation of DA using the above data is as follows:

DA with effect from 1st January 2021= [ (330+328+326+329+330+332+336+338+340+344+345+342)/12]-(261.4)X100/261.4
= 28%

 

Table of Consumer Price Index with the base 2001=100 calculated from CPI (IW) with Base 2016=100 for the Months from September 2020 to June 2021

 

MonthCPI (IW) 2016=100 released by Govt from Sep 2020CPI (IW) 2001=100 calculated using the linking factor of 2.88
July 2020not implemented336
August 2020not implemented338
September 2020118.1340
October 2020119.5344
November 2020119.9345
December 2020118.8342
January 2021118.2340
February 2021119.0343
March 2021119.6344
April 2021120.1346
May 2021120.6347
June 2021121.7350

 

New DA Calculator for calculating Dearness Allowance payable to Central Government Employees and Pensioners

Taking in to account, all the factors discussed above we have now come up with a new DA Calculator using which we can estimate Dearness Allowance applicable to Central Government Employees and Pensioners.

For example Calculation of DA with effect from 1st July 2021 for Central Government Employees and Pensioners using the above data for the period from July 2020 to June 2021 is as follows:

DA with effect from 1st July 2021= [ (336+338+340+344+345+342+340+343+344+346+347+350)/12]-(261.4)X100/261.4
= 31%