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Confederation : Dearness Allowance & Consumer Price Index under attack


04 Sep, 2013 7:56p.m.

The Consumer Price Index is the main base for calculation of Dearness Allowance for the Central Government and State Government Employees and also the Industrial and Bank Employees.

The Consumer Price Index (CPI) is calculated using following steps :

a) Market prices are collected for 252 items by the Officials of Department of Statics and Department of Posts. These prices of that item & place are sent to Central processing unit from 78 centres all over India ( which are enclosed for your reference).

b) The all India weights given the each category of items such as food 49.71%, housing 9.77 % , fuel 9.49% , footwear 0.68% transportation 7.5 %, Medical 5.31 % Personnel care 2.92 % & Miscellaneous 26.31 % total 100% . CPI points are determined using this all India weights and prices of the 252 items. (which are enclosed for your reference)

Now from the angle of Employees point of view following changes in all India weights should be brought.

a) Housing should be given as 15 % instead of just 9.77 % . 
b) Medical should be increased to 15% from 5.31 %.
c) The Miscellaneous items should be reduced to just 5% instead of 26.31 %

The prices have risen by over 200% in last 6 ½ years, whereas the CPI has shown an increase from 115 points in Jan 2006 to 235 points in July 2013 that means an increase of
120 points and the actual DA is only 92%. There is fault in the calculation of CPI itself apart from present DA formula , as undue all India weights is given for some items such as miscellaneous items such as 26% whatever increase in prices of the food, fuel, transportation, housing are nullified by these 26% decrease in prices or marginal increase in miscellaneous items.

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