DA from July 2018 – Increase 2% Expected

DA from July 2018 – Increase 2% Expected – Estimated DA with effect from July 2018 will be 9% – Suggestion based on actual Consumer Price Index for 10 months and estimated CPI for 2 months

Central Government Employees including Railway Employees, Defence Personnel and all Central Services and Defence Pensioners are paid dearness allowance at the rate of 7% with effect from January 2018.

We have attempted to estimate DA from July 2018 in this article.

Dearness Allowance payable with effect from 7th CPC Basic Pay

= (Avg of CPI-IW for the past 12 months – Average of CPI-IW recorded in 2015)*100/(Average of CPI-IW recorded in 2015)

New DA Calculator for calculating Dearness Allowance payable on 7th CPC Basic Pay:

Taking in to account, the revised DA Calculation Formula we have now come up with a new 7th Pay Commission DA Calculator.

DA from 1st July 2018:

We need AICPI (IW) (All India Consumer Price Index (Industrial Workers) for the months from July 2017 to June 2018 to determine Dearness Allowance with effect from July 2018. Actual Consumer Price Index for the months from July 2017 to March 2018 which are already available are tabulated as follows.

Month	Actual AICPI-IW
July-2017	285
Aug-2017	285
Sep-2017	285
Oct-2017	287
Nov-2017	288
Dec-2017	286
Jan-2018	288
Feb-2018	288
Mar-2018	287
Apr-2018	288
May-2018	To be released
Jun-2018	To be released

With actual CPI for the months from July 2017 to April 2018 and estimated CPI from May 2018 to June 2018, we have to determine DA from July 2018.

Expected DA from July 2018 : Estimation : 1

A conservative estimation of keeping CPI for May and June 2018, at the same level which was recorded in the month of April 2018 viz., CPI of 288, gives us an increase of 2% in DA from July 2018.

A with effect from 1st July 2016	= [ (285+285+285+287+288+286+288+288+287+288+288+288)/12]-(261.4)X100/261.4
	= 9 % (increase of 2% from the present DA of 7%)

 Expected DA from July 2018 : Estimation : 2

We need at least 4 point increase in consumer price index for the month of May 2018 and at least 1 point increase from that level in the month of June 2018 to get 3% increase in DA with effect from July 2018.  In other words, Consumer price index should at least be recorded as 292 and 293 in the month of May and June 2018 to get Dearness Allowance to increase to 10% with effect from July 2018.

DA with effect from 1st July 2016	= [ (285+285+285+287+288+286+288+288+287+288+292+293)/12]-(261.4)X100/261.4
	= 10 % (increase of 3% from the present DA of 7%)

 Expected DA from July 2018 : Estimation : 3

In the lowe side, CPI should record below 277 in the month of May 2018 and June 2018 to get DA increase of 1% or no increase in DA  with effect from July 2018 compared to January 2018.

DA with effect from 1st July 2016	= [ (285+285+285+287+288+286+288+288+287+288+276+276)/12]-(261.4)X100/261.4
	= 8 % (increase of 3% from the present DA of 7%)

Out of 3 Estimations for DA from July 2018, which has got more chance ?

Considering the previous Trend in Consumer Price Index, Chances for Estimation 1 is possible.

Chances for Estimation 2 may not be possible a as CPI should increase 4 points from the present level in the month of May 2018.

Estimation 3 is likely to happen only if 12 point decrease in consumer price index for the month of May 2018 . Decrease in CPI to such an exteent is not at all possible considering the past trend in CPI.

Hence, based on the above calculations, it is expected that DA from July 2018 will be 9% and net increase from July 2018 will be 2%

Checkout this new DA Calculator for Dearness Allowance after implementation of 7th Pay Commission report, to verify the above calculations.