Dear Seniors,
I would like to gather more information on various price indices and their effect on DA. I am from Tamil Nadu and receive information on a monthly basis about various indices, specifically for my district as well.
We do not have VDA but have Basic, DA, and other allowances. Is there any way I can make use of this information? Please advise.
I understand that National/Festival Holidays wages are eligible only if an employee worked on the preceding and succeeding days of a holiday. Is this correct? Please advise.
From India, Tiruppur
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13I would like to gather more information on various price indices and their effect on DA. I am from Tamil Nadu and receive information on a monthly basis about various indices, specifically for my district as well.
We do not have VDA but have Basic, DA, and other allowances. Is there any way I can make use of this information? Please advise.
I understand that National/Festival Holidays wages are eligible only if an employee worked on the preceding and succeeding days of a holiday. Is this correct? Please advise.
From India, Tiruppur
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Dear If you don’t have VDA as a salary component in your company, then you don’t need to worry about CPI. CPI is directly related to VDA and nothing else. Regards
From India, New Delhi
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From India, New Delhi
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Hi,
CPI is nothing but VDA. The name is termed differently in different states. CPI stands for Consumer Price Index, and VDA stands for Variable Dearness Allowance. So, both acronyms refer to the same concept.
Regarding the eligibility for receiving holiday wages, an employee must be present either on the succeeding or preceding days of the holiday. If the employee is absent on both the succeeding and preceding days of the holidays, the days in between the absent days are considered as absences, and no holiday wages should be paid by the employer.
Mohan Rao Manager HR
From India, Visakhapatnam
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CPI is nothing but VDA. The name is termed differently in different states. CPI stands for Consumer Price Index, and VDA stands for Variable Dearness Allowance. So, both acronyms refer to the same concept.
Regarding the eligibility for receiving holiday wages, an employee must be present either on the succeeding or preceding days of the holiday. If the employee is absent on both the succeeding and preceding days of the holidays, the days in between the absent days are considered as absences, and no holiday wages should be paid by the employer.
Mohan Rao Manager HR
From India, Visakhapatnam
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Thank you for the inputs..But I would like to have a copy of related (holiday wage) documents / part of act doc for my verification and better understanding.
From India, Tiruppur
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From India, Tiruppur
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Dear Mr. ant 1511 So I guess that Mr. Rao is not correct on the VDA part Any comments, please go ahead. regards
From India, New Delhi
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From India, New Delhi
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i also agree with the part of VDA. I think that Mr. Rao is not clear on this part kamal From Bangladesh
From Bangladesh, Dhaka
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From Bangladesh, Dhaka
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As per section 79 of factories Act 1948 ,incase of Earned leaves holidays needs to be excluded. Regards, Girish
From India
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From India
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My dear Awvik,
It is amazing to find such a lack of awareness. Please do something about it by explaining in detail.
VDA - Variable Dearness Allowance (which is based on CPI). CPI - Consumer Price Index (which is tracked every week by NCAER, FinMin). VDA is in addition to FDA (Fixed Dearness Allowance) and is the variable component of DA. VDA changes every quarter (which is notified) as a percentage change to CPI.
Regards.
From India, Delhi
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It is amazing to find such a lack of awareness. Please do something about it by explaining in detail.
VDA - Variable Dearness Allowance (which is based on CPI). CPI - Consumer Price Index (which is tracked every week by NCAER, FinMin). VDA is in addition to FDA (Fixed Dearness Allowance) and is the variable component of DA. VDA changes every quarter (which is notified) as a percentage change to CPI.
Regards.
From India, Delhi
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Dear Mr. Hansdah,
That's the problem with a few members on this site. They are so confident about themselves that they don't really bother about what comments they are posting. They don't realize that what they are posting is affecting the new generation of HR professionals who are not aware of such complicated matters as VDA or CPI. They are getting the wrong information, which in turn is affecting their HR knowledge.
By the way, I have posted earlier on matters related to VDA and CPI. So, if anyone is interested, he or she can check my earlier post.
Regards
From India, New Delhi
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That's the problem with a few members on this site. They are so confident about themselves that they don't really bother about what comments they are posting. They don't realize that what they are posting is affecting the new generation of HR professionals who are not aware of such complicated matters as VDA or CPI. They are getting the wrong information, which in turn is affecting their HR knowledge.
By the way, I have posted earlier on matters related to VDA and CPI. So, if anyone is interested, he or she can check my earlier post.
Regards
From India, New Delhi
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Again can any one explain the mathematical relationship between CPI & VDA. On increase of how many points we should raise wages at what rate
From India, Tiruppur
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From India, Tiruppur
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Dear Mr. Ramesan,
If you think that VDA and CPI can be explained in one or two paragraphs, then I am sorry to say that you have greatly mistaken. Your question may be very simple, but trust me, the answer is really very difficult to explain. Even if I explain, you would not be able to understand, as VDA is a huge and complicated area. I can guarantee that not many HR people across India, and I mean India, have an in-depth knowledge of VDA. I doubt whether anyone in this forum would be able to make you understand the entire nuances of VDA calculation. So, my suggestion would be that you find some person in your area who is an industrial and labor law expert and who deals with such matters in his own company and discuss the matter with him. I think that would be the ideal solution for you.
Regards
From India, New Delhi
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If you think that VDA and CPI can be explained in one or two paragraphs, then I am sorry to say that you have greatly mistaken. Your question may be very simple, but trust me, the answer is really very difficult to explain. Even if I explain, you would not be able to understand, as VDA is a huge and complicated area. I can guarantee that not many HR people across India, and I mean India, have an in-depth knowledge of VDA. I doubt whether anyone in this forum would be able to make you understand the entire nuances of VDA calculation. So, my suggestion would be that you find some person in your area who is an industrial and labor law expert and who deals with such matters in his own company and discuss the matter with him. I think that would be the ideal solution for you.
Regards
From India, New Delhi
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Mr. Rao is correct in terms of the continuous leave if the person avails leave on the preceding and succeeding the paid festival or national holiday. The total leave will be calculated as 3 days leave, and it will be deducted from the person's leave credit.
K. Gopalakrishnan
From India, Bangalore
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K. Gopalakrishnan
From India, Bangalore
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Dear Awvik, Thank you for your timely intervention and making this point very clear. Also can you help me to find out any good books where I can sharpen my knowledge in this part
From India, Tiruppur
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From India, Tiruppur
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Dear Ramesan,
Thank you very much for understanding my point. Sorry to say once again that no book gives you a detailed understanding of VDA. At least I haven't seen one. You have to know it from someone who is dealing in this matter. I myself did that and that's when I realized what VDA is all about. It's a huge area, and no book can explain in such detail. You need to know a lot of things to understand what VDA is all about. Only then can you start thinking of the calculation of VDA.
Regards
From India, New Delhi
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Thank you very much for understanding my point. Sorry to say once again that no book gives you a detailed understanding of VDA. At least I haven't seen one. You have to know it from someone who is dealing in this matter. I myself did that and that's when I realized what VDA is all about. It's a huge area, and no book can explain in such detail. You need to know a lot of things to understand what VDA is all about. Only then can you start thinking of the calculation of VDA.
Regards
From India, New Delhi
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Mr. Ramesan,
You can develop the formula as per the below guidelines.
A = S x (Xn - Xo) / Xo
A = Amount to be added in VDA in the quarter under consideration.
S = Basic
X0 = Base CPI Index (Reference index)
Xn = Revised CPI Index during the quarter under consideration.
From India, Lucknow
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You can develop the formula as per the below guidelines.
A = S x (Xn - Xo) / Xo
A = Amount to be added in VDA in the quarter under consideration.
S = Basic
X0 = Base CPI Index (Reference index)
Xn = Revised CPI Index during the quarter under consideration.
From India, Lucknow
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Dear Mr. Ponraj,
Brilliant! I never knew that the calculation of VDA was so easy. Now, could you please tell me, if my basic is 3000, Xn = 1000, and Xo = 1020, what would be the amount added to my existing VDA?
Eagerly waiting for your reply.
Regards
From India, New Delhi
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Brilliant! I never knew that the calculation of VDA was so easy. Now, could you please tell me, if my basic is 3000, Xn = 1000, and Xo = 1020, what would be the amount added to my existing VDA?
Eagerly waiting for your reply.
Regards
From India, New Delhi
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Mr. Avik,
Thank you for your (sarcastic) reply. I am not aware of how the VDA is being revised every quarter. The guideline formula that I provided is used to calculate the escalation amount of the contract price for the price variation of inputs.
From India, Lucknow
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Thank you for your (sarcastic) reply. I am not aware of how the VDA is being revised every quarter. The guideline formula that I provided is used to calculate the escalation amount of the contract price for the price variation of inputs.
From India, Lucknow
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Mr. Ponraj,
Please understand that VDA is not an easy subject. Please don't post such things about which you are not confident and which may lead to further confusion. Let people know the hard way; otherwise, it may lead to serious problems in the future for the new generation of HR professionals.
Regards,
By the way, sorry for the sarcasm.
From India, New Delhi
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Please understand that VDA is not an easy subject. Please don't post such things about which you are not confident and which may lead to further confusion. Let people know the hard way; otherwise, it may lead to serious problems in the future for the new generation of HR professionals.
Regards,
By the way, sorry for the sarcasm.
From India, New Delhi
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I agree. It is quite a detailed subject. Moreover, it is complicated by the fact that there are systems (salary & wages administration policy) with 100% neutralization of DA and some where it is not so. In addition to it, DA for Govt. employees is administered in a different way; whereas it is different for, say, PSUs which are in the manufacturing/industrial sector; based on the All India Consumer Price Index Number for Industrial Workers. Right, Awvik?
From India, Delhi
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From India, Delhi
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Dear My seniors, I have posted this query.. what should I understand from this discussion. or cam any one help me to find out a good book on this subject?? Please advise
From India, Tiruppur
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From India, Tiruppur
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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 for this, we have to wait until the next Wage Revision, which is not practical. That is why the DA is introduced.
The devaluation of money can be assessed through Wholesale 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 Wholesale Price Index.
But for AICPI, there are some differences/limitations:
1. There is a particular Consumer, viz. Industrial Worker.
2. Some specified goods & services are defined, called "basket of goods."
3. Along with the price variation of commodities, its consumable quantity will also be considered.
4. All over India, 78 Centres are selected to take an average.
Based on All India Consumer Price, Industrial DA is being paid; variable in quarters commencing from January, April, July & October. 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 neutralisation. The formula for full DA neutralisation = (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 is recorded as 170, 170 & 172 (Base year 2001). Multiply by 4.63 and round, we get 787, 787 & 796 (Base year 1982). Multiply by 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. The percentage 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. The percentage is 1011/2884 x 100 = 35.1 (Correct to one decimal).
I shall insert an 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-colored 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 obtained from the following site.
[Labour Statistics Page 2](http://labourbureau.nic.in/indexes.htm)
From India, Bangalore
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The devaluation of money can be assessed through Wholesale 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 Wholesale Price Index.
But for AICPI, there are some differences/limitations:
1. There is a particular Consumer, viz. Industrial Worker.
2. Some specified goods & services are defined, called "basket of goods."
3. Along with the price variation of commodities, its consumable quantity will also be considered.
4. All over India, 78 Centres are selected to take an average.
Based on All India Consumer Price, Industrial DA is being paid; variable in quarters commencing from January, April, July & October. 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 neutralisation. The formula for full DA neutralisation = (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 is recorded as 170, 170 & 172 (Base year 2001). Multiply by 4.63 and round, we get 787, 787 & 796 (Base year 1982). Multiply by 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. The percentage 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. The percentage is 1011/2884 x 100 = 35.1 (Correct to one decimal).
I shall insert an 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-colored 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 obtained from the following site.
[Labour Statistics Page 2](http://labourbureau.nic.in/indexes.htm)
From India, Bangalore
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State minimum Wage-01-04-2017 (VDA).pdf