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Tuesday, September 9, 2014

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
Eb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Max
increase
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





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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%


                                                                

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