Considering the living cost and all, Wage Revision is being done once every five or ten years. However, inflation will continue to rise daily, resulting in a decrease in the value of money. To address this issue, we are required to wait until the next Wage Revision, which is not practical. Thus, the concept of Dearness Allowance (DA) is introduced.
The devaluation of money can be measured through indices such as the Wholesale Price Index and the All India Consumer Price Index. The key distinction between these two indices is that the Wholesale Price Index considers price variations of all commodities, whereas the All India Consumer Price Index is based on a specific consumer group, namely Industrial Workers, focusing on a selected "Basket of Goods."
Industrial DA is calculated based on the All India Consumer Price Index and is paid quarterly starting from January, April, July, and October. For instance, in January, the AICPI average is calculated based on the previous September, October, and November. Similarly, for April, it is based on December, January, and February, for July on March, April, and May, and for October on June, July, and August.
When the full compensation for money devaluation is achieved, it is termed as full DA neutralisation. The formula for full DA neutralisation is calculated as (Total points - Base points) / Base points (in percentage). The All India Consumer Price Index was introduced in India in 1960 and subsequently revised in 1982 and 2001. The AICPI of 2001 multiplied by 4.63 yields the AICPI of 1982, and the AICPI of 1982 multiplied by 4.93 yields the AICPI of 1960. The base AICPI for DA calculation is considered to be the AICPI of 1960.
In India, there are primarily two wage settlement terms in existence: Wage Settlements of 1.1.1997 and 1.1.2007, with base points of 1708 and 2884 respectively.
I will illustrate an example, the calculation of AICPI for July '10. This is equivalent to the average of the previous March, April, and May, which are recorded as 170, 170, and 172 (Base year 2001). After multiplying by 4.63, rounding, and converting to the base years 1982 and 1960, the final average is calculated as 3895.
For the 1.1.97 scale, the DA calculation is as follows: Total points - 3895, Base points - 1708, Total - Base = 2187. The percentage is 2187/1708 x 100 = 128.0 (Correct to one decimal).
For the 1.1.2007 scale, the DA calculation is as follows: Total points - 3895, Base points - 2884, Total - Base = 1011. The percentage is 1011/2884 x 100 = 35.1 (Correct to one decimal).
Regarding the IDA calculation from 1.10.2008, I will insert an Excel sheet. You can extend the rows as needed and enter the three indexes up to the year 2001 in green columns. The results will be displayed in yellow, while red is used for static information.
With regards,
ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Limited, PALAKKAD - 678 623,
KERALA, INDIA.
+91 9447 467 667
The AICPI (base 2001) can be obtained from the following site: [Labour Statistics Page 2](http://labourbureau.nic.in/indexes.htm)