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
From India, Bangalore
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530As 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
From India, Bangalore
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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
From India, Bangalore
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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
From India, Bangalore
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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
From India, Bangalore
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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
From India, Bangalore
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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
From India, Kakinada
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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
From India, Kakinada
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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
From India, Bangalore
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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
From India, Bangalore
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Dear Abbas, Good information. But can you please attach copy of official notification in support of your post.
From India, Delhi
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From India, Delhi
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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
From India, Mumbai
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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
From India, Mumbai
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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
From India, Kakinada
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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
From India, Kakinada
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The Official Notification from Department of Public Enterprises will come by July end only. This is an advance information based on All India Consumer Price Index. Abbas.P.S
From India, Bangalore
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From India, Bangalore
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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.
From India, Bangalore
Acknowledge(0)Amend(0)
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.
From India, Bangalore
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