01-01-2015
NEW YEAR THOUGHTSPRICE RISE AND DA
As reported in this website yesterday, the IDA rate will increase by 2.2% from today.
But, Labour Bureau says there was no increase in the All India Consumer Price Index (CPI)
with 2001=100 points.
Some friends want clarification.
...........
IDA is granted based on three months average Index.
CPI for June 2014 was 246 points.
CPI for July 2014 was 252 points
CPI for August 2014 was 253 points.
Average for the above 3 months was 250.33 points.
CPI for September, October and November was 253 points.
Average for these three months is same 253 points.
As there was some increase in the average for three months from 250.33 to 253 points,
there is some increase in IDA rate also, though there was no increase in CPI
during the period of September- November 2014.
It is a fact that there was no significant price rise on many items during the last 3-4 months.
Not because of the policies of Government of India or the State governments in India.
Main reason is that international price of crude oil came down drastically from 130 Dolors to 50 Dollars.
Because there is a competition now between Arab countries and Russia.
The price of petrol in India should have been reduced to Rs 50 or Rs 40 per litre. It was not done.
Petrol price has the cascading impact on price of many other items.
CDA is granted once in six months, based on average of 12 months CPI. Index is same.
When average for 12 months is taken, then there is always some increase.
For example: CPI for January 2014 was 237 points and for November it is 253 points.
This increase in CPI for a longer period will reflect in CDA rate.
CDA rate was increasing by 10 % in six months period.
Since there was not much increase in CPI during the last four months,
the increase in CDA may come down to 6 percent this time from 1-1-2015
WHY TWO RATES FOR CDA AND IDA?
In the case of CDA, the CPI merged at the time of last pay/pension revision from 1-1-2006
was 115.76 points . The increase over and above 115.76 is taken for grant of CDA now.
Whereas, in the case of IDA, 126.33 points were merged on 1-1-2007.
The present IDA rate is fixed for the increase over and above 126.33 points.
This difference definitely reflects in the rates of CDA and IDA.
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