CPI-IW drops by 0.6 points. DA from July 2021 likely around 30%

The Labour Bureau has publishes the All India Consumer Price Index for Industrial Workers (AI CPI-IW) for the month of January 2021. The index decreased by 0.6 points and stood at 118.2 (one hundred eighteen and point two). On 1-month percentage change, it decreased by 0.51 with respect to the previous month whereas no change was observed between corresponding months a year ago. The figure for the previous month had also seen a decrease by 1.1 points. 

The decrease in the index is mainly contributed by the decrease in the prices of items in the basket under the Food & Beverages group. The contributors are Rice, Wheat Atta, Arhar Dal, Poultry (Chicken), Eggs-Hen, Banana, Brinjal, Cabbage, Carrot, Cauliflower, Chilies Green, Garlic, Ginger, Onion, Peas, Potato, Tomato etc.

The reduction is a minor one and will not impact the Dearness Allowance considerably, The CPI-IW for the month of January 2021 will be used for the calculation of the Dearness Allowance from July 2021 and five more figures are required for this. The government has frozen the DA till June 2021. Hence it is expected that the Hike DA will be available from the month of July 2021  or even earlier. Read: Dearness Allowance de-freezing as Holy Bonanza?

It is too early to comment on DA from July 2021 as only 7 of the 12 indices are available. A rough estimation suggests it will be somewhere around 30% to 31%

Meanwhile, it is officially recorded that the country has exited recession gross domestic product (GDP) expanded by 0.4 per cent in the three months ended December 2020.