How to calculate increase in DA/DR slabs for RBI pensioners/employees

Before we proceed further , the following terms should be noted;

DA-Dearness allowance for working employees

DR-Dearness relief for retirees/pensioners

CPI-consumer price index  AICPI – All India Consumer Price Index.

AICPIN- All India Consumer Price Index Numbers.

DA figures calculations are based  on AICPIN for Industrial Workers (base 2001=100). The index numbers are  released on the last working day of the succeeding month and  are updated on the same day in the Website meaning that numbers  for the month of September 12 will be released on last working day of October 12 i.e. on 31st October 12 and shall be  updated on the day itself by labour bureau on their website.

The advance Calender issued by  the labour bureau for the period from September 12 to December 12 is reproduced here.

Sep	Oct	Nov	Dec
2012	2012	2012	2012
31-Oct	30-Nov	31-Dec	31-Jan
2012	2012	2012	2013

Initially , The Consumer Price Index Numbers for Industrial Workers ( base 1960=100) was started w.e.f. August, 1968  on the basis of Weighting Diagram drawn by conducting the Family Living Survey (FLS) in 1958-59.

A new series with base 1982=100  replaced the old series (1960=100) with effect from October, 1988.

Further, a  new series with base 2001=100 has  replaced the series on base 1982=100 w.e.f. January, 2006 and still continues.

Accordingly, we have 3 series, as below, for supply of  data and subsequent  DA/DR calculations.

1. AICPIN-2001

2. AICPIN-1982

3. AICPIN-1960

These  3 series are linked with linking  factors  and that is  How  index numbers from one base year to another are converted.

For example ,we get the index numbers AICPIN-2001 for  August 12 in  the month of september 12 and the figure is 214.

 For a pensioner/family pensioner  who has started getting his pension  in 1992 the AICPIN-1960 is applicable in RBI/other(Public Sector Banks) PSBs  as AICPIN-2001 were not in vogue then. So, ‘214’ is required to be converted  base 1982 =100, by using  a linking factor 4.63.

Multiply 214 by 4.63 to get the Index numbers for  base (1982=100),which  comes to 990.82.   Further Linking factor  4.93 is applied   to convert to base year 1960 =100 ; which is  = 4884.75(990.82*4.93)

Therefore we have,

AICPIN -2001	index numders =214
AICPIN-1982	= 214*4.63 =990.82
AICPIN-1960	= 990.82*4.93= 4884.75

How index numbers are employed to calculate DA:

Different industries use different methodology as per the agreements entered into with workers.In Some industries it is payable monthly , in some on  quarterly basis , and in some on  half-yearly basis.

Central government  use a slightly different methodology based on notifications issued by the Government as per the recommendations of various Pay commissions and will be dealt with in some later post.

In banking industry, and some financial institutions like Nabard,NHB,IDBI,  DA is payable quarterly to the existing employees and half-yearly to their  pensioners/family pensioners and is being explained here.

The DA is calculated on the figures from Jan-June ,payable in August and July-Dec. payable in February every year.

For arriving at the increase in percentage DA the following procedure is adopted.

1.For Pensioners in Banks Average of last quarter of the previous  6 months figures  published in Consumer Price Index Numbers for Industrial Workers (base 2001=100). is calculated. the figures AICPIN-2001   for the period Jan 12 to June 12 are given in the table below where average of quarter Apr-June is taken into account:

Jan-12	Feb-12	Mar-12	Apr-12	May-12	Jun-12	Average
198	199	201	205	206	208	206.33

The average for the period Apr-June comes to 206.33.

This average is converted to base year 1960=100, by the linking factor 4.63*4.93 so the index numbers for the base year (1960=100 ) come to 4709.67

As per the wage agreements in banking industry the points that have been merged in various wage agreements in basic pay and consequently in Basic pension  may be classified in 5 categories :

cat-1	cat-2	cat-3	cat-4	cat-5
1-11-07  onwards	1-11-02    to   31-10-07	1-11-97   to   31-10-02	1-11-92    to    31-10-97	1-11-87  to  31-10-92
2836	2288	1684	1148	600	index numbers merged in settlements
1873.67	2421.67	3025.67	3561.67	4109.67	balance Index numbers

As one slab of DA = 4 points of index numbers, the figures against balance index numbers given in last row of the table above are divided  by 4  to get the total slabs payable to  each category(cat 1.. cat-2. etc.)And by multiplying the slabs by % rate per slab we get the total % of DA admissible.

	cat-1	cat-2	cat-3	cat-4	cat-5
	468	605	756	890	1027
% rate per slab	0.15	0.18	0.24	0.35	0.67
% of DA	70.2	108.9	181.44	311.5	688.09

If we  reduce the number of slabs already paid in Feb 12 , we get the increase in number of slabs.

Those who are calculation shy there is a interactive calculation sheet which gives projected slabs with a click of mouse and can be viewed here.