DA CALCULATION METHOD TO BE MODIFIED

New Delhi: The central government is set to modify the index and base year for calculating Dearness allowance (DA), a move that may result in another type of DA will be given to 4.9 million central government employees and 6.1 million pensioners, the labour ministry sources said.

New series of CPI-IW, which will be used for determining D.A. According to the sources, the labour ministry is re-working the consumer price index (CPI-W) that is used to determine DA and the labour bureau under the ministry has finalised the new CPI-IW with base year 2016.
The sources further said that the base year is proposed to be revised in every six years so that it captures the change in living expenses more accurately.
The base year of the current CPI-IW is 2001 and it was last changed in 2006 by the Sixth Central Pay Commission. Prior to that, the base year was 1982.
DA is an increment paid as a percentage of basic salary to employees to adjust their salary to reflect the change in the cost of living.

The proposed index will include addition of new industrial centres to make price gauze more representative, taking total number of industrial centres under consideration to 88 against 78 now. Additionally, various new items are being added to the list, including cars and mobiles, to cover the change in lifestyle of industrial workers and employees over the last 15 years, the sources said.
The new index will soon go to the technical advisory committee for vetting, after which it will go to the national tripartite consultation before it is finalised, the sources said.
The labour bureau had taken approvals from standing tripartite committee at all stages of development of the index, the official further added.
The Union Cabinet increased DA to 7 percent from 5 percent effective January 2018. The revision done in March was based on the recommendations of the 7th Pay Commission and had benefited the central government employees and the pensioners.
Now, with the latest revision in Dearness Allowance (DA), central government employees can witness further increase in their compensation.