In the first place ,tell us what is compulsion to introduce DA in your organ? companies in private sector having double link age ie both to basic salary slabs and CPI have been experiencing disproportionate growth in DA component and distortion in the wage structure. If you have no compulsion , don't think of
Your query on DA for private employee is not understood. Still there are organisations those are following VDA component for counter price rise, where DA is given. However if you want to go for increment in wages to commensurate with price rise. You need to follow or monitor the CPI everymonth and see the % variation happens. Simply calculate the mean% between the price index and fix a price per point increase or decrease. On that basis you can make addition, if it is increased.
I want share a general concern which I have observed earlier and now also that the querist do not provide essential/relevant information on the query which results into giving views on assumptios and sometimes can be misleading.
As regards the question regarding DA , whether it is academic or arising out of some practical issue has not been stated. Besides it would help if info is given on which industry, whether manufacturing or commercial, whether unionised and such other so that members can give value-added response.
I have already stated that DA component for unionised workers and staff in many well established concerns have risen uncontrollbly high distorting the wage structure and creating anamolies like worker getting more salary than Supervisors and also reducing the salary differentials to unfair levels.
The above notwithstanding, if there is compulsion ( union demand) to introduce DA, following may be kept in mind:
1.DA is paid to protect basic wages(purchasing power) against the price rise of essential commodities . DA was introduced for the first during second world war and for good reasons but over a period due to union demands/pressure it has unprecedented growth and all the principles of DA fixation in organised sector were thrown to winds by adopting veriety of formula during each successive wage abreementsfor buying peace
Particularly when you are negotiating with the union.
3. By very concept DA is to protect basic wages from erosion due to price rise, it cannot be linked to productivity gains and only leads to automatic rise in wage cost.
4.Therefore, if possible have consolidated salary scales( meaning salary is inclusive of DA).and other allowances as per industry cum region basis.