Calculation of DA - dearness allowance.. CiteHR
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Calculation Of DA - Dearness Allowance

Satish B Started The Discussion:

Calculation of DA

Dearness Allowance is calculated based on Cost of Leaving Index(Shimla points) based on cost and dearness of commodities this DA is calculated by the Labour department where every month publication at the department will be made in this regard by Govt. Twice a year it will be published by department based on that DA should be revised

We can get this information from so many publishers. How is calculated also we can have full details

Satish B

abbasiti - Contributing Member
Considering the living cost and all, Wage Revision is being done once in five years or ten years. But inflation will go up day by day and subsequently the money value will come down. To compensate this we have to wait till the next Wage Revision, which is not practical. That is why the DA is introduced.

The devaluation of money can be assessed through Whole Sale Price Index, All India Cosumer Price Index etc. The difference between these two is that, price variation of all commodities are taken into account for Whole Sale Price Index.

But for AICPI there are some differences/ limitations.

1. There is a particular Consumer viz. Industrial Worker.

2. Some specified goods & services are defined, called "basket of goods".

3. Along with the price variation of commodities, its consumable quantity will also be considered.

4. All over India 78 Centres are selected to take average

Based on All India Consumer Price, Industrial DA being paid; variable in quarters commencing from January, April, July & October. I.e. for January the AICPI will be the average of previous September, October & November. Similarly for April it will be December, January & February, for July it will be March, April & May and for October it will be June, July & August respectively.

When the money devaluation is fully compensated it is called as full DA neutralisation. The formula for full DA neutralisation = (Total points - Base points)/ Base points (in percentage). The AICPI is introduced in India in 1960 and revised in 1982 & 2001. AICPI of 2001 x 4.63, we get AICPI of 1982 and AICPI of 1982 x 4.93, we get AICPI of 1960. For DA calculation AICPI of 1960 is accepted as the base.

Now in India mainly two term's wage settlements are in exist; Wage Settlements of 1.1.1997 & 1.1.2007. The base point in 1.1.1997 is 1708 & in 1.1.2007 is 2884.

I shall quote one example,i.e. calculation of AICPI for July '10. This is equalent to average of previous March, April & May; which recorded as 170, 170 & 172 (Base year 2001). Multiply with 4.63 and round, we get 787,787 & 796 (Base year 1982). Multiply with 4.93 and round, we get 3880,3880 & 3924 (Base year 1960). Find average of these 3 and round, we get 3895.

DA for 1.1.97 scale. Total points - 3895, Base points - 1708, Total - Base = 2187. % is 2187/1708 x 100 = 128.0 ( Correct to one decimal).

DA for 1.1.2007 scale. Total points - 3895, Base points - 2884, Total - Base = 1011. % is 1011/2884 x 100 = 35.1 ( Correct to one decimal).

I shall insert Excel sheet for IDA calculation w.e.f 1.10.2008. You may extent the rows further (as necessary) and just enter the 3 indexes towards the year 2001 in green colour columns. The results will appear in yellow and red is used for static informations.

With regards

ITI Employees' Association,
ITI Limited, PALAKKAD - 678 623,
+91 9447 467 667

AICPI (base 2001) can be had from the following site.
Labour Statistics Page 2

v.harikrishnan - Contributing Member
Dear Mr.Sathish
The cost of living index is calculated and published by the Labour Bureau Simla. This organisation is part of the Ministry of Labour, Government of India. Different years and different places are taken as a base for calculating the CLI. Dearness allowance for different companies/establishments depends on the terms and conditions of employment/agreement/settlement which will provide the CLI to be followed, the base point and the rate at which for every specified increase in the CLI the employer/management has to increase the dearness allowance. In the case of "workmen" covered by the Industrial Disputes Act, usually the dearness allowance is determined through negotiations and settlements. There is no specific legal requirement that a particular series of CLI should be followed by the employer. This is usually decided by mutual agreement.
With regards

Kindly guide to calculate IDA for April 2013 and it will be appreciable if any formula is available in excel sheet. Kind regards ( Walia)

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