Expected DA January 2016 – Important Elements in Deciding the 7th Pay Commission’s Multiplication Factor

Expected DA January 2016 – Important Elements in Deciding the 7th Pay Commission’s Multiplication Factor

“Attention now shifts to the last additional DA of the 6th Pay Commission.”

Why are articles and news about dearness allowance to Central Government employees so important?

Even if the amount isn’t all that big, the fact that dearness allowance is given twice a year makes it significant. The reason why DA is so special is because all the Central Government employees, from the employees of lowest category, justify up to the higher officials, are given the same percentage of hike. This is also one of the reasons why Central Government jobs are so lucrative. This is why, in addition to the Central Government employees and pensioners, even state government employees and pensioners are curious to know.

On September 6, the Central Cabinet Committee gave its approval to a 6 percent hike in DA. Adding this additional DA, Central Government employees now eligible to get a DA of 119 percent from July 1, 2015 onwards.

This week, the Finance Ministry will issue orders for the releasing payment of additional DA, with effect from 01.07.2015 onwards, to Central Government employees and pensioners. The salaries this month will be issued along with the 119 percent DA and arrears for July and August will also. The 119% DA will continue until December 2015. New additional DA will be issued from 01.01.2016 onwards, which will be added to the current 119 percent. If the new DA calculation method suggested by the 7th Pay Commission comes into effect on 01.01.2016, then the revised pay, with the 119 percent added to it, will be calculated from that day onwards.

The 6th Pay Commission had fixed the Multiplication Factor as 1.86. As a result, the DA, which on 01.07.2005 was 21 percent, has increased by 3 percent from 01.01.2006 onwards to 24 percent.

On 01.03.2004, 50 percent DA was merged to the basic pay. As on 1.1.2006, the total Dearness Allowance of 74% was taken for the purpose of arriving the Multiplication Factor. And the Multiplication Factor was revised at 1.86.

Similarly, the DA to be issued on 01.01.2016 will be added and only then will the revised basic pay be calculated according to the 7th Pay Commission. The newly calculated salary alone will be given for the next six months, from January to June, without any Dearness Allowance.

Some have misunderstood this and have concluded that the additional Dearness Allowance for 01.01.2016 will not be given. This is not true.

Exactly how did the Government arrive at 1.86?

Here is an explanation how –
Let us assume the Basic Pay, as of 01.01.2006, as 100%. Let’s take the Dearness pay (post the 50% DA Merger) as 50%. Let us also take into account the 24% Dearness Allowance that was given before 01.01.2006.

If you add Basic Pay and Dearness Pay and calculate 24% of it, then you’d get 36%. (100 + 50 = 150 / 24 x 100 = 36)
100% + 50% + 36% = 186%
This number is being taken for calculations as 1.86.