Dear All,
I would like to know about the calculation of VDA that is based on AICPI. Another confusion that I am having is regarding the neutralization of the rise in the prices of essential commodities through VDA. Is the VDA being paid to me actually neutralizing, considering that the All India Consumer Price Index (AICPI) is at its lowest? Interestingly, the prices of essential commodities have significantly increased in recent times. Is the AICPI valid? Are there any alternatives to VDA that can help neutralize the rising cost of essential commodities?
From India, Guwahati
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I would like to know about the calculation of VDA that is based on AICPI. Another confusion that I am having is regarding the neutralization of the rise in the prices of essential commodities through VDA. Is the VDA being paid to me actually neutralizing, considering that the All India Consumer Price Index (AICPI) is at its lowest? Interestingly, the prices of essential commodities have significantly increased in recent times. Is the AICPI valid? Are there any alternatives to VDA that can help neutralize the rising cost of essential commodities?
From India, Guwahati
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Considering the living cost and all, Wage Revision is being done once every five or ten years. However, inflation will continue to rise day by day, causing the value of money to decrease. Waiting until the next Wage Revision to compensate for this is not practical, which is why Dearness Allowance (DA) is introduced.
The devaluation of money can be assessed through the Wholesale Price Index, All India Consumer Price Index, etc. The key difference lies in the fact that the Wholesale Price Index considers price variations of all commodities, while the All India Consumer Price Index is based on a specific consumer group, namely Industrial Workers, and focuses on a specified set of goods and services known as the "Basket of goods."
Based on the All India Consumer Price Index, Industrial DA is paid quarterly, 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 the full compensation for money devaluation is achieved, it is termed as full DA neutralization. The formula for full DA neutralization is calculated as (Total points - Base points) / Base points (in percentage). The All India Consumer Price Index 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 by multiplying the AICPI of 1982 by 4.93, we get the AICPI of 1960. The AICPI of 1960 is considered as the base for DA calculation.
In India, there are primarily two wage settlement terms in existence: Wage Settlements of 1.1.1997 and 1.1.2007. The base point for 1.1.1997 is 1708, and for 1.1.2007, it is 2884.
I will provide an example of 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). When multiplied by 4.63 and rounded, we get 787, 787, and 796 (Base year 1982). Further multiplication by 4.93 and rounding gives us 3880, 3880, and 3924 (Base year 1960). By averaging these three values and rounding, we arrive at 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 calculated as 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 calculated as 1011/2884 x 100 = 35.1 (Correct to one decimal).
I will include an Excel sheet for IDA calculation effective from 1.10.2008. You may extend the rows as needed and enter the three indexes towards 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
AICPI (base 2001) can be accessed from the following site:
Labour Statistics Page 2
From India, Bangalore
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530The devaluation of money can be assessed through the Wholesale Price Index, All India Consumer Price Index, etc. The key difference lies in the fact that the Wholesale Price Index considers price variations of all commodities, while the All India Consumer Price Index is based on a specific consumer group, namely Industrial Workers, and focuses on a specified set of goods and services known as the "Basket of goods."
Based on the All India Consumer Price Index, Industrial DA is paid quarterly, 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 the full compensation for money devaluation is achieved, it is termed as full DA neutralization. The formula for full DA neutralization is calculated as (Total points - Base points) / Base points (in percentage). The All India Consumer Price Index 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 by multiplying the AICPI of 1982 by 4.93, we get the AICPI of 1960. The AICPI of 1960 is considered as the base for DA calculation.
In India, there are primarily two wage settlement terms in existence: Wage Settlements of 1.1.1997 and 1.1.2007. The base point for 1.1.1997 is 1708, and for 1.1.2007, it is 2884.
I will provide an example of 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). When multiplied by 4.63 and rounded, we get 787, 787, and 796 (Base year 1982). Further multiplication by 4.93 and rounding gives us 3880, 3880, and 3924 (Base year 1960). By averaging these three values and rounding, we arrive at 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 calculated as 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 calculated as 1011/2884 x 100 = 35.1 (Correct to one decimal).
I will include an Excel sheet for IDA calculation effective from 1.10.2008. You may extend the rows as needed and enter the three indexes towards 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
AICPI (base 2001) can be accessed from the following site:
Labour Statistics Page 2
From India, Bangalore
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