Industrial Da W.e.f 01.07.2011 - Xls Download

Dear friends,

As you know, the Industrial DA from 1.4.2011 onwards is 47.2% for the 1.1.2007 scale and 148.6% for the 1.1.1997 scale. This was due to the average AICPI of December 2010 (185 points), January 2011 (188 points), and February 2011 (185 points).

Now, the Industrial DA will continue at 47.2% for the 1.1.2007 scale and 148.6% for the 1.1.1997 scale, with no difference. This is the result of the average AICPI of March 2011 (185 points), April 2011 (186 points), and May 2011 (187 points).

Abbas.P.S

Dear Abbasji,

Thank you for the useful information. We have received the timely update on IDA. Could you please provide a detailed description of the IDA calculation in an Excel file? I am confident that people will gain a clear understanding from the wealth of knowledge you possess.

Thanks and regards,
Asok Kumar.R

Dear Sanjay & Asok Kumar,

Considering the living cost and all, Wage Revision is being done once every five or ten years. However, inflation will increase day by day, leading to a decrease in the value of money. Waiting until the next Wage Revision to compensate for this is not practical, which is why the DA is introduced.

The devaluation of money can be assessed through the Wholesale Price Index, All India Consumer Price Index, etc. The difference between these two is that the Wholesale Price Index takes into account price variations of all commodities.

For the All India Consumer Price Index, there are some differences and limitations:

1. It focuses on a specific consumer, the Industrial Worker.
2. It defines specified goods and services known as a "basket of goods."
3. It considers both the price variation of commodities and their consumable quantity.
4. It selects 78 centers across India to calculate the average.

Based on the All India Consumer Price Index, Industrial DA is paid, with variations in quarters starting from January, April, July, and October. For instance, the AICPI for January is the average of the previous September, October, and November. Similarly, for April, it is December, January, and February; for July, it is March, April, and May; and for October, it is June, July, and August.

When full compensation for money devaluation is achieved, it is called full DA neutralization. The formula for full DA neutralization is (Total points - Base points)/Base points (in percentage). The AICPI was introduced in India in 1960 and revised in 1982 and 2001. By multiplying the AICPI of 2001 by 4.63, we obtain the AICPI of 1982, and multiplying the AICPI of 1982 by 4.93 gives us the AICPI of 1960. For DA calculation, the AICPI of 1960 serves as the base.

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

In India, two main wage settlements exist: Wage Settlements of 1.1.1997 and 1.1.2007. The base points are 1708 for 1.1.1997 and 2884 for 1.1.2007.

For example, let's calculate the AICPI for July '10, which is equivalent to the average of the previous March, April, and May, recorded as 170, 170, and 172 (Base year 2001). By multiplying these values with 4.63 and rounding, we get 787, 787, and 796 (Base year 1982). Multiplying with 4.93 and rounding gives 3880, 3880, and 3924 (Base year 1960). The average of these three values, when rounded, is 3895.

For the 1.1.97 scale DA, the total points are 3895, the base points are 1708, and the difference is 2187. The percentage is 2187/1708 x 100 = 128.0 (correct to one decimal).

For the 1.1.2007 scale DA, the total points are 3895, the base points are 2884, and the difference is 1011. The percentage is 1011/2884 x 100 = 35.1 (correct to one decimal).

I will insert an Excel sheet for IDA calculation effective from 1.10.2008. You can extend the rows as needed and enter the three indexes toward the year 2001 in the green-colored columns. The results will be displayed in yellow, while red is used for static information.

Abbas.P.S

Dear Abbas ji,

Please clarify, is it VDA or IDA? Which one are you explaining is associated with Variable Dearness Allowance. This will depend on the Consumer Price Index Number, which is notified by the concerned Labour Department every six months. It is not treated as DA (Dearness Allowance).

Regards,
PBS KUMAR

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, some people use it as VDA. This is directly linked to the All India Consumer Price Index. However, the DA pointed out by you is not directly linked to the AICPI. At least you have to wait for the Government declaration. But in the case above, we are able to directly calculate DA from the Consumer Price Index.

Abbas.P.S

Dear Abbas,

Good information. But can you please attach a copy of the official notification in support of your post.

Dear Abbas,

In my 22-year professional career in HR, it was very difficult to understand the concept of DA. I would appreciate it if you could kindly provide me with your phone number so that I can gain a better understanding of DA neutralization. The information you have shared is excellent, and I am eager to learn more about it as our LTS is nearing finalization. Please assist by sharing your phone number.

Regards,
Jay Kumtekar
HR Manager
Ramada Plaza Palm Grove Hotel
9967542262

Dear Abbas ji,

The CPI will be declared by state governments every six months. The All India Consumer Price Index will be useful for government enterprises (like steel plants, BHEL, BEL, etc.). 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 class) may not follow the DA. Please correct me if I am wrong.

Regards,
PBS KUMAR

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 to share useful information with CitHrians. Our hearty congratulations. Thanks to CitHr as well for the valuable services in imparting and upholding knowledge. Together as a team, we will try to work forward to convert the economy into a knowledge economy.

Once again, thank you for your dedication.

Regards,
Asok Kumar R.

Dear Abbas,

It is really interesting and thoughtful of you to share your knowledge. I appreciate your interest.

I need some more guidance related to the above discussion:

For Organization Settlement, the due date is 01-06-2008. According to the Government, 50% of the Basic salary as of 01-01-2007 should be provided separately as Dearness Pay, which will be considered for all other eligible allowances.

Now, let's consider an example: Employee X has a BASIC salary of Rs.14,300 as of 01-01-2007 (before the DA merger). His current DA is approximately Rs.6200.

If we follow the DA merger circular from the Government, 50% of the Basic salary amounts to Rs.7150, which should be designated as Dearness Pay.

The next step involves deducting the arrived Dearness Pay, i.e., Rs.7150, from the paid DA of Rs.6200. The remaining amount should be shown as DA in the subsequent months based on the DA amount already paid.

Since the Dearness Pay exceeds the DA paid, what should be the solution? Should the excess amount be shown as DP as per the Government directive, and any surplus beyond this should be debited according to the Government order when DA surpasses this threshold?

What is the acceptable interpretation? Also, what portion of the DA should be merged with the basic salary as of 01-06-2008 following the LTS fitment methodology?

Please provide guidance.

R.G. Raja

9176839058 Chennai

Dear Sri R.G. Raja,

Normally, DA will be merged with the basic in connection with the wage revision. The full DA as of the due date on which the wage revision is to be effective will be merged with the basic. This will be added to the fitment benefit (e.g., 30% of basic + DA) to arrive at the corresponding revised scale.

For most PSUs, the wage revision is due on 1.1.2007. The DA on the said date is 68.8%. When the wage revision is delayed by one year, the Department of Public Enterprises has issued a circular to grant a 50% DA merger (out of the 68.8%) as interim relief (IR), known as Dearness Payment (DP). The balance DA on 1.1.2007 will be 68.8 - 50 = 18.8%. This is applicable to both basic and DP. Effectively, the balance DA will be 18.8% x 100% + 18.8% x 50% = 18.8 + 9.4 = 28.2%. All further increases in DA will be additionally added up by 50%. However, this is only a temporary adjustment until the wage revision is finalized. Criteria for wage revision are furnished in the first paragraph.

Out of the above, the second clause is applicable for the wage revision due on 1.1.2007 only. On the said date, DA is more than 50%. For a lesser DA, it is not practical to merge. Also, it is not in compliance with the DPE guidelines.

Abbas. P. S.

Dear friends,

As you know, the Industrial DA from 01.10.2011 onwards is 52% for the 1.1.2007 scale and 156.6% for the 1.1.1997 scale. Now, the projected figure from 01.01.2012 onwards is 56.5% (Diff. 4.5%) for the 1.1.2007 scale and 164.2% (Diff. 7.6%) for the 1.1.1997 scale.

Note: This is based on the AICPI up to 30.10.2011 published on 30.11.2011. The result of one more month, viz. Nov 2011, has yet to come for the final figure.

Abbas.P.S

Dear Abbasji,

Thank you for your current DA updates. Knowledge updation will not take place without an innate thirst for knowledge, but sharing knowledge further expands your boundaries without limitations. Once again, thank you for your support to all the citehr members.

Asok Kumar.R

Dear Abbasji,

Thank you for your regular DA updates. I eagerly look forward to your posts, and indeed, they have considerably enhanced my knowledge quotient regarding Dearness Allowance.

Shantanu Ghosh.