7th Pay Commission DA Calculation : The 7th Central Pay Commission has recommended to calculate the Dearness Allowance for Central Government Employees in the present formula and methodology.
8.17.34 The Dearness Allowance (DA) is paid to Central Government employees to adjust the cost of living and to protect their Basic Pay from erosion in the real value on account of inflation. Presently, DA is based on the All India Consumer Price Index (Industrial Workers).
8.17.35 The JCM-Staff Side has suggested that the existing formula for the calculation of DA may continue.
Analysis and Recommendations
8.17.36 The VI CPC had recommended that the National Statistical Commission may be asked to explore the possibility of a specific survey covering government employees exclusively, so as to construct a consumption basked representative of government employees and formulate a separate index. This has, however, not been done.
8.17.37 Keeping in mind that the present formulation of DA has worked well over the years, and there are no demands for its alteration, the Commission recommends continuance of the existing formula and methodology for calculating the Dearness Allowance.
As per the recommendation of 7th CPC, the DA Calculation after 1.1.2016 may be continued with the average index of 261.42.
Dearness Allowance Formula = ((Average of last 12 months of AICPIN – 261.42) x 100) / 261.42)