Expected DA from January 2015 – The Next Episode Begins…!

Expected DA from January 2015 – The Next Episode Begins…!

The Centre has announced a hike of 7% Dearness Allowance and Dearness Relief for Central Government employees and Pensioners, with effect from July 2014 on 4th of this month. Soon, Finance Ministry will issue appropriate orders for payment of Dearness allowance to all.  As and when orders are published by the Ministry of Finance, we will be posted in our website immediately.

According to the fluctuation of price index past six months from Jan to Jun 2014, the additional Dearness allowance has been arrived as 7% only. It seems there are a few employees who are unhappy with the single-digit number because until then they have been getting double-digit DA hikes.

The disappointment also reflects the high expectations that people have from the Modi government. Our readers have been raising a number of questions in this regard. While the previous Manmohan Singh government had twice given them DA hike of 10%, why has Modi government given them only 7% increase?

First of all, the ruling party at the Centre has no direct impact on the DA calculations. DA is calculated on the basis of AICPIN points, which are based on price rise.

The current system of DA calculations, which is being done as per the recommendations of the 6th Pay Commission, will come to an end after two more instalments (Jan 2015 and July 2015). Recommendations of the 7th Pay Commission are expected to come into effect from Jan 2016 onwards.

Now, the next episode begins…’Expected DA from January 2015′

It is highly unlikely that there will be a two-digit DA hike in the next two instalments (January 2015 and July 2015). Kindly keep in mind the fact that despite a 6 point increase of the AICPIN from 246 to 252 for the month of July 2014, there was hardly an impact. Even if it increases by 3 points over the next five months, the DA would increase to 9% only. It is impossible for AICPIN to constantly increase in future.

We believe that, under current circumstances, the next installment of additional Dearness allowance from Jan 2015 hike would only be about 6 or 7%.

We have analyzed the impact of CPI number on increasing DA and given below a table to express the same for your information…