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Friday, December 8, 2017

DA from January 2018 for Central Government Employees and Pensioners is estimated to be 7%

DA from January 2018 payable Central Government Employees and Pensioners is estimated to be 7% – 2% increase in Dearness Allowance is expected from the Month of January 2018


Calculation DA from January 2018 based on All India Conumer Price Index for the months from January 2017 to October 2017 with estimated index for November and December 2017
After witnessing a static level of Consumer Price Index for the months from July 2017 to September 2017, we have two point increase in CPI (IW) for the month of October 2017.
DA from July 2017 – Govt has recently released All India Consumer Price Index (Industrial Workers) for the month of May 2017 (AICPI – IW)Labour Bureau press release on All India Consumer Price Index (Industrial Workers) for the month of Oct 2017


On the basis of actual Consumer Price Index for 10 Months and projected CPI (IW) for the months of November 2017 and December 2017, we have estimated here the DA from January 2018 applicable to Central Government Employees including Railway Employees and Defence Personnel and all Pensioners.
Projected CPI for Nov and Dec 2017
Actual Moderate
Inflation
High
Inflation
Negative
Inflation
Month CPI CPI CPI CPI
Jan-2017 274 274 274 274
Feb-2017 274 274 274 274
Mar-2017 275 275 275 275
Apr-2017 277 277 277 277
May-2017 278 278 278 278
Jun-2017 280 280 280 280
Jul-2017 285 285 285 285
Aug-2017 285 285 285 285
Sep-2017 285 285 285 285
Oct-2017 287 287 287 287
Nov-2017 287 293 280
Dec-2017 287 295 276
DA from Jan 18 7% 8% 6%
Moderate increase or Static CPI (IW) in the months of November and December 2017:

DA with effect from 1st January 2017 = [ (274+274+275+277+278+280+285+285+285+287+287+287]-(261.4)X100/261.4
= 7 %
As you could see from the table and calculation above, with the actual consumer price index from January 2017 to October 2017 and statically projected CPI for November 2017 and December 2017, DA from January 2018 for Central Government Employees is estimated to be 7%.
High Inflation and consequent increase in CPI (IW) in the months of November and December 2017:

DA with effect from 1st January 2017 = [ (274+274+275+277+278+280+285+285+285+287+293+295]-(261.4)X100/261.4
= 8 %
Only if Consumer Price Index touches 293 and 295 in the months of November 2017 and December 2017 respectively, DA from January 2018 would increase to 8% .
So 3% increase in DA from January 2018 is possible only if very High Inflation in the price of essential commodities is noticed and consequent increase in CPI (IW) in the months of November and December 2017.
Since actual CPI for October 2017 is at 287, 5 point increase in CPI (IW) for the month of November 2017 and further 2 point increase in December 2017 is not expected.
Negative Inflation and consequent decrease in CPI (IW) in the months of November and December 2017:

DA with effect from 1st January 2017 = [ (274+274+275+277+278+280+285+285+285+287+280+276]-(261.4)X100/261.4
= 6 %
In the case of negative projection of CPI (IW) for November 2017 and December 2017, DA from January 2018 will be 6% i.e 1% increase in DA from January 2018, only if CPI decreased to 280 and 276 in November 2017 and December 2017 respectively. This scenario is also extremely unlikely conisdering the inflationary trend in prices.

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