Dear ALL, Please can any one explain me about how to calculate the Dearness Allowances of an Employee Thanks & Regards Y Aravind
From India, Hyderabad
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From India, Hyderabad
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Dear Aravind,
Considering the living cost and all, Wage Revision is being done once in five years or ten years. However, inflation will go up day by day, and subsequently, the value of money will decrease. To compensate for this, we have to wait until the next Wage Revision, which is not practical. This 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 price variation of all commodities is taken into account for the Wholesale Price Index.
However, 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 Centers are selected to take an average.
Based on the All India Consumer Price Index, 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 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. Multiplying the AICPI of 2001 by 4.63, we get the AICPI of 1982, and multiplying the AICPI of 1982 by 4.93, we get the AICPI of 1960. For DA calculation, the AICPI of 1960 is accepted as the base.
In India, mainly two terms of wage settlements exist; Wage Settlements of 1.1.1997 & 1.1.2007. The base point in 1.1.1997 is 1708, and in 1.1.2007 is 2884.
I shall quote one example, i.e., the calculation of AICPI for July '10. This is equivalent to the average of the previous March, April & May; which are 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. % 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 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,
ITI Ltd,
PALAKKAD - 678 623
From India, Bangalore
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552Considering the living cost and all, Wage Revision is being done once in five years or ten years. However, inflation will go up day by day, and subsequently, the value of money will decrease. To compensate for this, we have to wait until the next Wage Revision, which is not practical. This 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 price variation of all commodities is taken into account for the Wholesale Price Index.
However, 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 Centers are selected to take an average.
Based on the All India Consumer Price Index, 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 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. Multiplying the AICPI of 2001 by 4.63, we get the AICPI of 1982, and multiplying the AICPI of 1982 by 4.93, we get the AICPI of 1960. For DA calculation, the AICPI of 1960 is accepted as the base.
In India, mainly two terms of wage settlements exist; Wage Settlements of 1.1.1997 & 1.1.2007. The base point in 1.1.1997 is 1708, and in 1.1.2007 is 2884.
I shall quote one example, i.e., the calculation of AICPI for July '10. This is equivalent to the average of the previous March, April & May; which are 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. % 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 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,
ITI Ltd,
PALAKKAD - 678 623
From India, Bangalore
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