Dear Friends,
Can anyone tell me what the Cost of Living Index is and what the relationship is between the Consumer Price Index and DA? How is it calculated, and how does it help in salary revision?
Please advise.
Tara
From India, New Delhi
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1Can anyone tell me what the Cost of Living Index is and what the relationship is between the Consumer Price Index and DA? How is it calculated, and how does it help in salary revision?
Please advise.
Tara
From India, New Delhi
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Hi Mr. Tara,
Please go through the Google site. I promise you will find the required information there, rather than going through a specific economics book. If you discover anything useful, kindly email me at silu.mankind@gmail.com.
Thank you,
Kali Prasanna Sarangi
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Please go through the Google site. I promise you will find the required information there, rather than going through a specific economics book. If you discover anything useful, kindly email me at silu.mankind@gmail.com.
Thank you,
Kali Prasanna Sarangi
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Hi Tara, If you find anything corelated to CPI kindly communicate it to me ASAP. Hoping for your cooperation Regards Kali Prasanna Sarangi
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Dear Tara Prasad,
I shall incorporate some details on Consumer Price Index and Industrial DA.
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 Consumer Price Index, etc. The difference between these two is that the price variation of all commodities is taken into account for the Whole Sale Price Index. But the All India Consumer Price Index is based on a particular consumer, viz. Industrial Worker, and even on some specified commodities & services called "Basket of goods."
Based on All India Consumer Price, Industrial DA is being paid; variable in quarters commencing from January, April, July & October. i.e. for January, the AICPI will be the average of the 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 full DA neutralization. The formula for full DA neutralization = (Total points - Base points)/ Base points (in percentage). The AICPI was 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.
Now in India, mainly two terms wage settlements are in existence; 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 equivalent to the average of the 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 the 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 extend the rows further (as necessary) and just enter the 3 indexes towards the year 2001 in green color columns. The results will appear in yellow, and 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
AICPI (base 2001) can be had from the following site.
[Labor Statistics Page 2](http://labourbureau.nic.in/indexes.htm)
From India, Bangalore
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I shall incorporate some details on Consumer Price Index and Industrial DA.
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 Consumer Price Index, etc. The difference between these two is that the price variation of all commodities is taken into account for the Whole Sale Price Index. But the All India Consumer Price Index is based on a particular consumer, viz. Industrial Worker, and even on some specified commodities & services called "Basket of goods."
Based on All India Consumer Price, Industrial DA is being paid; variable in quarters commencing from January, April, July & October. i.e. for January, the AICPI will be the average of the 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 full DA neutralization. The formula for full DA neutralization = (Total points - Base points)/ Base points (in percentage). The AICPI was 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.
Now in India, mainly two terms wage settlements are in existence; 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 equivalent to the average of the 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 the 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 extend the rows further (as necessary) and just enter the 3 indexes towards the year 2001 in green color columns. The results will appear in yellow, and 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
AICPI (base 2001) can be had from the following site.
[Labor Statistics Page 2](http://labourbureau.nic.in/indexes.htm)
From India, Bangalore
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COST OF LIVING INDEX NUMBER FOR EMPLOYEES.pdf
Cost Inflation Index Upto 2014-15.docx