How to calculate Dearness Allowance from the year 2006, twice a year using this average index? It is quite simple. Say, if you want to calculate Dearness Allowance with effect from Jan-06, get the average of monthly All India Consumer Price Index (IW) with the base year 2001=100 for the preceding 12 months and apply the same in the following formula

Dearness Allowance = (Avg of AICPI for the past 12 months - 115.76)*100/115.76

For your convenience, here is a small and smart tool that can calculate the dearness allowance with effect from January or July of a particular year in the future, once the AICPI(IW) for a particular month is published by the Government.

What you have to do is, go to Labour bureau website by clicking the link below, where Government officially post the All India consumer price Index every month. Just enter the said price index for the relevant month in the calculator below and enter required "calculate DA .." button. For example if you want to estimate DA for the Jan-11 ensure that consumer price index from Jan-10 to Dec-10 is filled up in the calculator and click "Calculate DA Jan-11" button. The result field will give you the DA percentage calculated using the price index.

Check this Labour Bureau, Department Statistics, Government of India website to know about CPI-IW index published every month.

Check this Dearness Allowance Calculating tool