Dear,
VDA is a benefit given to employees to meet the expenses for rise in prices and is directly related to the CPI (Consumer price Index) that is published by the Shimla Labour Bureau on a monthly basis. Currently there are three base years viz; 1960=100, 1982=100 and 2001=100 on which the VDA is calculated. Organizations those who give VDA to employees can use anyone of the base years for their calculation of VDA. Generally the union and the management sit together and decide as to what would be the neutralizing factor for each point rise or fall in the CPI e.g. Rs 2/- per point or Rs 3/- per point etc. Once that is decided, then for each month we multiply the rise or fall in CPI to the netralizimg factor and accordingly pay the VDA. Thus VDA is variable as the name suggests and it can rise or fall for every month.
It sounds a bit confusing but VDA is a vast concept and it's really difficult to give such answers here. Hope you understand.
Regards