Dec 31, 2017

DA From January 2018 Will Be 7% For Central Government Employees

Calculation DA from January 2018 based on All India Conumer Price Index for the months from January 2017 to October 2017 with estimated index for November and December 2017
After witnessing a static level of Consumer Price Index for the months from July 2017 to September 2017, we have two point increase in CPI (IW) for the month of October 2017.
DA from July 2017 – Govt has recently released All India Consumer Price Index (Industrial Workers) for the month of May 2017 (AICPI – IW)
On the basis of actual Consumer Price Index for 10 Months and projected CPI (IW) for the months of November 2017 and December 2017, we have estimated here the DA from January 2018 applicable to Central Government Employees including Railway Employees and Defence Personnel and all Pensioners.

Projected CPI for Nov and Dec 2017
ActualModerate
Inflation
High
Inflation
Negative
Inflation
MonthCPICPICPICPI
Jan-2017274274274274
Feb-2017274274274274
Mar-2017275275275275
Apr-2017277277277277
May-2017278278278278
Jun-2017280280280280
Jul-2017285285285285
Aug-2017285285285285
Sep-2017285285285285
Oct-2017287287287287
Nov-2017288288288288
Dec-2017269300268
DA from Jan 187%8%6%

Moderate increase or Static CPI (IW) in the months of November and December 2017:

DA with effect from 1st January 2017= [ (274+274+275+277+278+280+285+285+285+287+288+269]-(261.4)X100/261.4
= 7 %
As you could see from the table and calculation above, with the actual consumer price index from January 2017 to November 2017 and very safely projected CPI for December 2017 (269), DA from January 2018 for Central Government Employees is estimated to be 7%.

High Inflation and consequent increase in CPI (IW) in the months of November and December 2017:

Only if Consumer Price Index touches 300 in the months of December 2017, DA from January 2018 would increase to 8% .
So 3% increase in DA from January 2018 is possible only if very High Inflation in the price of essential commodities is noticed and consequent increase in CPI (IW) in the months of November and December 2017.
Since actual CPI for November 2017 is at 288, 12 point increase in CPI (IW) for the month of December 2017 is not expected.

Negative Inflation and consequent decrease in CPI (IW) in the months of November and December 2017:

DA with effect from 1st January 2017= [ (274+274+275+277+278+280+285+285+285+287+280+268]-(261.4)X100/261.4
= 6 %
In the case of negative projection of CPI (IW) for November 2017 and December 2017, DA from January 2018 will be 6% i.e 1% increase in DA from January 2018, only if CPI decreased to 268 in December 2017. This scenario is also extremely unlikely considering the inflationary trend in prices.
Source - GConnect