4% increase in Expected Dearness Allowance (DA) from January 2020 for all Central Government Employees

4% increase in Expected Dearness Allowance (DA) from January 2020 for all Central Government Employees.

Employee news today confirms 4% Pay Hike for all Central Government Employees and State government employee. As we all know there would be 4% increase in Expected Dearness Allowance (DA) from January 2020 for all Central Government Employees.  
However, from January 2020, 3% increase in DA is almost confirmed as if the index decreases by 10 points in November 2019 and also in December then and only the government employees will get less than 3% increase in DA.

All India Consumer Price Index (AICPIN) Plays an important role in Dearness Allowance

If All India Consumer Price Index decreased by not more than 1 point in any of the remaining two months and not more than 2 in the other then also DA from January 2020 for Central Government Employees and Pensioners estimated to be 21% (4% increase). As we are Sure for all Central and State government employees to get 4% to confirm dearness allowance from January 2020.

DA from January 2020 – Central Government Employees and Pensioners are eagerly waiting for their entitled additional half-yearly installment of dearness allowance, even as January 2020 is approaching within a week.

In this article, We have estimated DA from January 2020, after Government has already declared the All India Consumer Price Index (AICPIN) for 10 months i.e January 2019 to October 2019. We have assumed no change in AICPI for the remaining two months (November 2019 and December 2019). After assuming no change in the remaining two months we are there to have almost 4% dearness allowance from January 2020.

Calculation of Dearness Allowance for Central Government Employees and Pensioners after implementation of 7th Pay Commission.

After the implementation of 7th Pay Commission recommendations with effect from 1st Jan 2016, there has been subsequently increase of 1%, 2%, 3% and 5% in dearness allowance.  Though 7th Pay Commission has recommended for using the same series of Consumer Price Index (Industrial Workers) with Base 2001=100, DA Calculation formula used for 6th CPC Pay will have to be revised as DA to the extent of 125% will be merged with Basic Pay on implementation of 7th Pay Commission recommendations.

In other words, DA after implementation of 7th CPC Pay with effect from 1st January 2016 will be reset to 0%.

New Dearness allowance (DA) Calculation Formula based on CPI (IW) after 7th Pay Commission implementation is as below:-

 

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)

Consumer Price Index from July 2018 to June 2019 is as follows. (Click here to get CPI released by Labour Bureau every Month)

                                               

Dearness Allowance Calculation
Month Actual AICPI-IW
January 2019 307
February 2019 307
March 2019 309
April 2019 312
May 2019 314
June 2019 316
July 2019 319
August 2019 320
September 2019 322
October 2019 325
November 2019 Not Released
December 2019 Not Released

Checkout here for official All India Consumer Price Index October 2019 Data

Four Scenario of Hike in Dearness allowance from January 2020

1. If a Total decrease of 20 points takes Place:- Even if the assumed index for the remaining two months reduced by 10 points each month, there will be 3% increase in DA from January 2020.

2. If the index stays at the present level (325) till December 2019 i.e., No increase or decrease in the Index in the remaining two months then there will be a confirmed 4% increase in DA from January 2020.

3. 4% increase in DA from January 2020, if the index decreases by not more than 1 point in any of the remaining two months and not more than 2 points in the other month.

4. Only if All India Consumer Price Index as in December 2019 increased to 340 at least from the present level of 325, with an intermediate increase of 12 points during November 2019 5% increase in DA from January 2020.

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On 24-Dec-2019

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