7% DA from July 2014 – Prompt decision is worth appreciating..!

The Centre has announced an additional 7% DA hike for the Central Government employees and Pensioners from July 2014.

Usually, agendas for central government employees’ DA hike are presented at the Cabinet meeting only on the third or fourth Thursdays of the month. There are times when these decisions were made during the last cabinet meeting of the season. Sometimes, these decisions are not made even during the last meeting and are taken up only during special meeting or at critical times.

On the 4th of this month, out of the blue, the Government announced a 7% DA hike. The cabinet’s announcement gives a positive conclusion to the relentless waiting of the past few weeks.

DA is calculated twice a year (from January to June, and from July to December) based on the changes in the Consumer Price Index (IW) BY 2001=100. The AICPIN numbers of the month are released by the Labour Bureau the following month.

In the month of August, the Labour Bureau sends the AICPIN data for the months of January to July, to the Finance Ministry. Based on the data, the Finance Ministry calculates the DA hike and the additional expense likely to be incurred, and presents the findings and reports towards the end of August to the Cabinet for its approval. The final decision is made in the month of September. This is the usual procedure.

Irrespective of the date of the Cabinet approval in the month of September, the DA hikes are calculated and given along with the salary for the month of September. Increase for the month of July and August are calculated and given as arrears to the employees and pensioners too.

Although 7% hike has been confirmed already, the prompt decision is worth appreciating!

CPI (IW) BY 2001=100 Data with calculation of additional Dearnress Allowance from July 2014…

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Central Cabinet Committee today gave its approval for an another 7% of additional Dearness Allowance for Central Government employees and pensioners with effect from 1st July 2014.

The total DA now stands at the level of 107% for next six months i.e., July to December and the calculation for next additional DA from Jan 2015 already started from July AICPIN statistics…

The press release of PIB is reproduced under here for your information…

Release of additional installment of Dearness Allowance to Central Government employees and Dearness Relief to pensioners due from 01.07.2014

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for the release of an additional installment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners with effect from 01.07.2014. This is an increase of seven percent over the existing rate of 100 percent of the Basic Pay/Pension, to compensate for price rise.

The increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission. The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be of the order of approximately Rs. 7691 crore per annum and Rs.5127 crore respectively in the financial year 2014-2015 (i.e. for a period of eight months from July, 2014 to February, 2015).

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Govt to increase dearness allowance to 107 p.c

The Government is likely to approve a hike in dearness allowance (DA) to 107 per cent from the existing 100 per cent, benefiting around 30 lakh Centre’s employees and its 50 lakh pensioners including dependents.

“The average rate of retail inflation for industrial workers from July 1, 2013 to June 30, 2014 works out to be 7.25 per cent. Thus the Central government will hike dearness allowance for it employees by 7 per cent,” an official said.

He said the Finance Ministry will now put a Cabinet proposal for approval of 7 per cent DA hike from July 1 this year as the revised Consumer Price Index-Industrial Workers data for June was released by Labour Ministry on Saturday.

With increase in DA, the pensioners will also gain as the benefit provided to them as dearness relief will be hiked to 107 per cent of basic pay.

The previous UPA government had increased DA to 100 per cent from 90 per cent with effect from January 1, 2014, on February 28 on the basis of agreed formula for revision of the allowance.

However, the central government employees’ union is not very enthused by the 7 per cent hike in the dearness allowance as their long pending demand of merger of DA with basic pay has not been given heed by 7th Pay Commission and the government.

“The erosion of value of wages is unbearable at 50 per cent dearness allowance. Now it will be 107 per cent. It is high time to merge DA with basic pay to provide relief to employees,” Confederation of Central Government Employees’ President KKN Kutty told PTI.

“We had summited our memorandum in this regard to 7th Pay Commission. They forwarded it to Central Government. We have apprised about the issue to the newly elected NDA government.

But no decision has been taken so far,” he said.

With merger of DA with basic pay, the salary and allowances paid in proportion of basic pay are increased. As per earlier practise DA was merged with basic pay once it breached 50 per cent mark. But the 6th Pay Commission has disallowed that.

Source : http://www.thehindu.com/news/national/govt-to-increase-dearness-allowance-to-107-from-100/article6366781.ece

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Expected DA July 2014 – Finally it concludes at 7%

As anticipated by all, the expected DA from July 2014 concluded at 7%.

With the announcement of the AICPI(IW) points for the month of June, the calculation of the additional dearness allowance for central government employees and pensioners from July onwards have ended. The percentage of Dearness allowance and Dearness relief to be paid from July 2014 will be increased by 7%.

Based on the recommendations of the 6th Central Pay Commission, in order to meet the rising expenses of essential commodities and inflation, dearness allowance is given twice every year to the central government employees – from January to June and from July to December – calculated on the basis of the All India Consumer Price Index of Industrial Workers Base Year 2001=100.

The most recently released AICPIN points for the month of June have increased by two and now stands at 246. Since the AICPIN points have increased by two, the dearness allowance percentage arrived at 107.25, is to be calculated, after ignoring the decimal points, as 7%. This will be officially announced by the Central Government after approval of Unionn Cabinet committee in the month of September.

The last two installments, 10% dearness allowance was being paid to the employees. Many wonder why it has come down to 7% this time. There are two main reasons for this, one is AICPIN points, and another is the method of calculating DA. One has to also keep in mind the fact that dearness allowance of 10% was also given based on the same calculations.

The fact is, the next two additional dearness allowances (Expected DA from January 2015, and expected DA from July 2015) are not likely to cross 5%.

Source : CGEN.in
The method of calculating dearness allowance is given in detail in the table below:
Click to view the table

Related article…

Expected DA Jan 2015 – Next destination of Dearness Allowance for CG Staff

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Consumer Price Index for Industrial Workers (CPI-IW) June, 2014

No.5/1/2014-CPI
GOVERNMENT OF INDIA
MINISTRY OF LABOUR & EMPLOYMENT
LABOUR BUREAU

‘CLEREMONT’, SHIMLA-171004
DATED: the 31st July, 2014

Press Release

Consumer Price Index for Industrial Workers (CPI-IW) June, 2014

The All-India CPI-IW for June, 2014 increased by 2 points and pegged at 246 (two hundred and forty six). On 1-month percentage change, it increased by 0.82 per cent between May, 2014 and June, 2014 when compared with the rise of 1.32 per cent between the same two months a year ago.

The largest upward pressure to the change in current index came from Food group contributing 1.37 percentage points to the total change. At item level, Rice, Fish Fresh, Goat Meat, Poultry Chicken, Milk, Onion, Potato, Tomato and other vegetables, Sugar, Cigarette, Electricity Charges, Bus Fare, Barber & Tailoring Charges, Toilet Soap, etc. are responsible for the increase in index.

However, this increase was restricted to some extent by Wheat & Wheat Atta, Edible Oils, Fruits, Soft Coke, Medicine (Allopathic), etc., putting downward pressure on the index. The year-on-year intlation measured by monthly CPI-IW stood at 6.49 per cent for June, 2014 as compared to 7.02 per cent for the previous month and 11.06 per cent during the corresponding month of the previous year. Similarly, the Food inflation stood at 5.88 per cent against 7.66 per cent of the previous month and 14.86 per cent during the corresponding month of the previous year.
At centre level, Goa, Mudurai. Vishakhapathnarn. Bengluru and Kodarma recorded the maximum increase of 6 points each followed by Ahmedabad and Hubli Dharwar (5 points each). Among others, 4 points rise was observed in 8 centres, 3 points in 11 centres, 2 points in 16 centres and 1 point in another 16 centres. On the contrary, a decline of 8 points was reported in Giridih, 2 points each in Yamunanagar and Sholapur, and 1 point in 5 centres. Indices of remaining 12 centres experienced no change. The indices of 36 centres are above and other 42 centres are below national average.
The next index of CPI-IW for the month of July, 2014 will be released on Friday, 29 August, 2014. The same will also be available, on the office website www.labourbureau.gov. in.

sd/-
(SEGI)
DIRECTOR

Source: http://labourbureau.nic.in/Press_Note_eng_jun2014.pdf

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