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Dear friends,
As you know the Indusrial DA from 1.4.2011 onwards is 47.2% for 1.1.2007 scale and 148.6% for 1.1.1997 scale. This was due to the average AICPI of December 2010 (185 points), January 2011 (188 points) & February 2011 (185 points).
Now the Industrial DA will be continued as 47.2% for 1.1.2007 scale and 148.6% for 1.1.1997 scale (no difference). This is the resultant of average AICPI of March 2011 (185 points), April 2011 (186 points) & May 2011 (187 points).

My dear Abbasji,
Thank you for the useful information. We have got the timely update of IDA. Can u please give the detailed description about the calculation of IDA calculation in an excel file. I am sure, people will have a clear picture from the warehouse of your knowledge box....
thanks and regards,
Asok kumar.R

Dear Sanjay & Asok Kumar,

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.

The indexes can be had from the web : Labour Statistics Page 2

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.


Attached Files
File Type: xls DA update.xls (25.5 KB, 631 views)

Dear Abbas ji,
Please clarify is it VDA or IDA . Which you are explain attracts with Variable Dearness Allowance, this will be depending on Comsumer Prise Index Number which is notified by the concern Labour Department in every six months. It not treated as DA (Dearnes Allowance).

Dear PBS Kumar,
The subject discussed above is Industrial DA, i.e the DA applicable for industrial employees. This may vary from quarter to quarter (3 months). Hence somebody use it as VDA. This is directly linked with the All India Consumer Price Index.
But the DA pointed out by you is not directly linked with the AICPI. Atleast you have to wait for the Government declaration. But in the case of above, we are able to directly calculate DA from the Consumer Price Index.

Dear Abbas, Good information. But can you please attach copy of official notification in support of your post.
Dear Abbas,
In my professional career of 22 years in HR it was very difficult to know this concept of DA.
I would request you to kindly give me your phone number so that i can get more idea about DA neutralisation.
It is an excellent information provided by you and i would like to learn more about it as our LTS is on the verge of being finalised.
Please help with your phone number.
Jay Kumtekar
HR Manager
Ramada Plaza Palm Grove Hotel.

Dear Abbas ji,
The CPI will be declared by state Governments in every six months. The All India Comsumer Prise Index will be useful for the Government Enterprises (like Steel Plants, BHEL, BEL, etc) the private Industries may follow the State CPI number and the Minimum Wages will be calculated based on that and will be treated as VDA. Most of the Private Industries (Middle classes) may not follow the DA. Please correct it if I am wrong.

The Official Notification from Department of Public Enterprises will come by July end only. This is an advance information based on All India Consumer Price Index. Abbas.P.S
My dear Abbasji,
Thank you very much for the detailed description of IDA calculation. You have added a lot to our knowledge Box... Once again you have proved your ability of sharing useful information to citehrians.... Our hearty congratulations...... Thanks to CitHr also for the valuable services for imparting and upholding knowledge.... Together as a TEAM we will try and work forward to convert the economy in to a knowledge economy.....
Once again thank u for you dedication....
Asok kumar.R

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