Expected Dearness Allowance from January 2015

Expected Dearness Allowance from January 2015

As all of us expected, 7% DA hike has been approved by Cabinet on 4th September 2014. Necessary order for payment of DA with effect from

1st July 2014 will be issued by Ministry of Finance soon. Here after our focus will be moving on to next instalment of dearness allowance which will be paid from 1st January 2015. We just analyse the trend of Consumer Price Index with the past seven months AICPCIN to arrive the expected DA from January 2015.

Since 2006, the AICPIN has witnessed second highest ever increase in July 2014. In 2009 the AICPIN increased by 7 points from 153 to 160 in the month of July. After that, an increase of 6 points over 246 points was declared in July 2014. It is the second highest monthly increase on AICPIN records from 2006. See the table below…

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sept	Oct	Nov	Dec	MaxIncrease
2006	119	119	119	120	121	123	124	124	125	127	127	127	2
2007	127	128	127	128	129	130	132	133	133	134	134	134	2
2008	134	135	137	138	139	140	143	145	146	148	148	147	3
2009	148	148	148	150	151	153	160	162	163	165	168	169	7
2010	172	170	170	170	172	174	178	178	179	181	182	185	3
2011	188	185	185	186	187	189	193	194	197	198	199	197	4
2012	198	199	201	205	206	208	212	214	215	217	218	219	4
2013	221	223	224	226	228	231	235	237	238	241	243	239	4
2014	237	238	239	242	244	246	252						6

What is the impact of this highest increase of AICPIN on expected Dearness Allowance from January 2015?

It is observed that when it was 7 points increase in July 2009, it influenced very much on increasing the rate of DA to be paid from 1st January 2010 and 1st July 2010. The rate of Dearness Allowance had been enhanced by 8% from 25% to 35% with effect from 1.1.2010 and 10% increase from 35% to 45% was declared with effect from 1.7.2010. Though there was no considerable increase after those 7 points in that particular 12 months from July 2009 to June 2010, the rate of DA had been reached 8% and 10% increase level for  successive two instalments.

From this point of view, it is quite obvious that this one month increase on AICPIN is enough to play a vital role to have a considerable hike in rate of Dearness Allowance for forth coming two instalments. So this 6 points increase of AICPIN in July 2014, we can expect, will have a profound impact on increasing the rate of Dearness allowance to be paid, not only from 1st January 2015, but also from July 2015.

Let us see the three probabilities of  AICPIN trend, through which we can figure out approximately the expected DA from January 2015 

Probabilities (with AICPIN-IW points)	Expected DA from Jan 2015
Average increase of 3 points for remaining 5 months	9%
Average increase of 2 points for remaining 5 months	8%
If same points (252)continues for remaining  5 months	6%