## 8% Dearness Allowance from 1st Jan, 2013?

## Central Government Employees, Pensioners and family Pensioners may get Dearness Allowance of 80% with effect from 1st January 2013

As we are in the halfway mark of calculating Dearness Allowance. effective from 01.01.2013, let us try to predict it based on current trend. The AICPI-IW No. for three months , i.e. July, Aug, Sep 2012 is published by the labour bureau. It is respectively 212,214 and 215.

Based on current situation, if we assume that inflation will remain same and the next three months figure remains static at 215, the total D.A. will be 80% of pay as on 01.01.2013.

If the figure increases 1 point each in the coming three months, the D.A. will still be 8%.

If the figure increases 2 point each in the coming three months, the D.A. will then be be 9%, which is not very likely.

So we predict a 8% rise in D.A. for Central Govt. employees with effect from January 2013. (See full calculation below)

This is the table All India consumer price index AICPI-IW for the period from January 2012 to September 2012

The above indices from Jan 2012 to Sept 2012, require special mention here as Calculation of expected Dearness Allowance for central government employees, Central Government Pensioners and central government family pensioners with effect from 1st January 2013 need these indices.

### The expected Dearness Allowance with effect from January 2013

To calculate Dearness Allowance with effect from January 2013 we require AICPI (IW) for previous 12 months.

Dearness Allowance with effect from 1st January every year | (Average of AICPI-IW for the months from January to December of previous year – 115.76)X100/115.76 |

Dearness Allowance with effect from 1st July every year | (Average of AICPI-IW for the months from July of previous year to June of this year – 115.76)X100/115.76 |

115.76 is a factor which converts 1982 series AICPI (IW) (Base 1982=100), which was applicable prior to 6CPC to 2001 series AICPIW (Base 2001=100). In turn, This is arrived at by dividing the 1982 series AICPI by a linking factor which is 4.63 (536/4.63=115.76) |

To estimate the Dearness Allowance that Central Government Employees and Pensioners will be getting with effect from 1st January 2013 based on AICPI-IW, we will consider following 4 Scenario

Scenario 1 (No Inflation) | Scenario 2 ( Inflation contained) | Scenario 3(Same inflationary trend) | Scenario 4 (More inflation) | |

Month | AICPI-IW | AICPI-IW | AICPI-IW | AICPI-IW |

Jan 2012 | 198 | 198 | 198 | 198 |

Feb 2012 | 199 | 199 | 199 | 199 |

Mar 2012 | 201 | 201 | 201 | 201 |

Apr 2012 | 205 | 205 | 205 | 205 |

May 2012 | 206 | 206 | 206 | 206 |

Jun 2012 | 208 | 208 | 208 | 208 |

Jul 2012 | 212 | 212 | 212 | 212 |

Aug 2012 | 214 | 214 | 214 | 214 |

Sep 2012 | 215 | 215 | 215 | 215 |

Oct 2012 (expected) | 215 | 210 | 216 | 217 |

Nov 2012 (expected) | 215 | 210 | 217 | 219 |

Dec 2012 (expected) | 215 | 210 | 218 | 221 |

Expected DA | 80% | 79% | 80% | 81% |

**Scenario 1:**

If we assume that there is no inflation from October 2012 and the AICPI-IW remains at 215 for the months of October, November and December 2012, the expected DA for the Central Government Employees and pensioners will be 80%, which is 8% more than the present 72%

**Scenario 2:**

If we assume that the inflation will be contained in the coming months and consequently AICPI-IW will be 210 for months from October 2012 to December 2012. Then based on following indices from January 2012 to December 2012 we get estimated DA of 79% with effect from January 2013, which is 7% more than the present 72%

**Scenario 3:**

If we assume that the nominal inflationary trend to continue in the coming months and consequently AICPI – IW increases 1 point each for the months from October 2012 to December 2012. Then expected DA will be 80% with effect from 1st January 2013, which is 8% more than the present 72%

**Scenario 4:**

If assume that inflation is more in the coming months and consequently AICPI-IW for the months from October 2012 to December 2012 increased two points each. Then expected DA will be 81% with effect from 1st January 2013, which is 9% more than the present 72%.

**We may get DA of 80% with effect from 1st January 2013 if we have same inflationary trend continues or even if we have no further inflation in the coming months:**

Based on the pattern we assume the chances for likely happening of scenario 1 and 3 are more. So, we may get DA of 80% with effect from 1st January 2013. The possibility of happening of scenario 4 is very less but we can not overrule the same in this inflationary trend. In that case we may get an additional DA of 9% with effect from 1st January 2013.

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