DEARNESS ALLOWANCE

Wikipedia defines Dearness Allowance (DA) as a cost of living adjustment allowance paid to Government Employees, Public Sector Employees and Pensioners in India, Bangladesh and Pakistan.

Dearness Allowance is linked to Consumer Price index. After the Second World War DA was known as Dearness Food Allowance. This concept of DA was introduced by Textile Industry in India. This DA is mainly given to beat inflation. This DA is based on location , hence it varies.

How is da calculated?

Da is calculated as % of basic pay in respect of Employees and % of basic pension in respect of Pensioners.

DA is calculated based on AICPI

For Central Government Employees

DA% =( Average of AICPI ( Base year 2001=100) for the past 12 months – 115.76/115.76)*100

For Central PSU

DA% =( Average of AICPI (Base year of 2001 =100) for the past 3 months-126.33/126.33)*100

what is CPI ?

Economic Times defines CPI as comprehensive measure used for estimation of price changes in a basket of Goods and services such as transportation ,food and medical care representative of consumption expenditure in an economy. It gives an idea of inflation. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

CPI increase is calculated by adding together a sampling of product prices of a previous year. The add together current prices of same products . Divide the total of current prices by old prices, then multiply the result by 100. subtract 100 to find the percentage change in CPI.

For AICPI you are requested to verify this site http://cyberjournalist.org.in/majithia/aicpi_2001.php

ALL INDIA AVERAGE CONSUMER PRICE INDEX (Base 2001=100) for industrial workers

YearJan.Feb.MarchAprilMay.JuneJulyAug.Sept.Oct.Nov.Dec.
2006119119119120121123124124125127127127
2007127128127128129130132133133134134134
2008134135137138139140143145146148148147
2009148148148150151153160162163165168169
2010172170170170172174178178179181182185
2011188185185186187189193194197198199197
2012198199201205206208212214215217218219
2013221223224226228231235237238241243239
2014237238239242244246252253253253253253
2015254253254256258261263264266269270269
2016269267268271275277280278277278277275
2017274274275277278280285285285287288286
20182882872872882892913013013013023020

Note: The index numbers with base 1982=100 can be obtained by multiplying the above values with the link factor of 4.63.

DA with effect from 1.1.19 =(288+288+287+288+289+291+301+301+301+302+302+302)/12=269.91-261.4=8.51*100=851/261.4=3.2approx equals 3%

This is the highest DA after 1.1.2016 For more details see the site specified above.

conclusion

Now do you understand how our DA is calculated if you have any more information you can add up in my comments.

Your attention is also invited to this you tube video https://www.youtube.com/watch?v=FWAozb5bBHM

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.