7% D.A hike is expected from 1st July 2012

The Dearness Allowance payable to Central Government Employees and Pensioners is determined based on All India Consumer Price Index for Industrial Workers. AICPI (IW) for the month of June 2012 has increased from 206 to 208.Basing on the calculation, there will be 7% increase and the expected D.A from 1st JULY 2012 is 72%. DA with effect from 1st July 2012 would be officially announced during September/October 2012.

The D.A calculation is as follows :

To calculate Dearness Allowance we require AICPI (IW) for previous 12 months.Dearness Allowance with effect from 1st January every year (Average of AICPI-IW for the months from January to December of previous year – 115.76)X100/115.76

Dearness Allowance with effect from 1st July every year (Average of AICPI-IW for the months from July of previous year to June of this year – 115.76)X100/115.76

115.76 is a factor which converts 1982 series AICPI (IW) (Base 1982=100), which was applicable prior to 6CPC to 2001 series AICPIW (Base 2001=100). In turn, This is arrived at by dividing the 1982 series AICPI by a linking factor which is 4.63 (536/4.63=115.76)

Calculation of DA with effect from 1st July 2012:

Month AIl Indian Consumer Price Index (AICPI-IW)

July 2011 193

Aug 2011 194

Sep 2011 197

Oct 2011 198

Nov 2011 199

Dec 2011 197

Jan 2012 198

Feb 2012 199

Mar 2012 201

Apr 2012 205

May 2012 206

Jun 2012 208

Average of AICPI (IW) for the period from July-2011 to June-2012:

(193+194+197+198+199+197+198+199+201+205+206+208)/12 = 199.58

DA with effect from 1st July 2012 = (199.58-115.76)X100/115.76)
= 72.41

Rounded to 72