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The Ministry of Labour and Employment's Labour Bureau recently unveiled the highly anticipated All-India Consumer Price Index for Industrial Workers (CPI-IW) for the month of April 2023. The index exhibited a moderate increase of 0.9 points, reaching a total of 134.2 points. This release holds significant importance for central government employees, as the CPI-IW figures are utilized in the calculation of their Dearness Allowance (DA).
Central government employees eagerly await the CPI-IW data, as it serves as a crucial determinant for their DA calculation. The DA is computed based on the 12-month average of the CPI-IW index. With the upcoming DA hike set to take effect from July 2023, two additional months of CPI-IW figures, namely May 2023 and June 2023, need to be incorporated.
The question that arises is the extent of the DA hike to be expected from July 2023. The calculation of the DA is subject to various factors, and it can be demonstrated that if the CPI-IW index remains unchanged or experiences a slight decrease over the next two months, the DA hike will be 3%, resulting in a total dearness allowance of 45% from July 2023. However, in a more likely scenario where the CPI-IW shows a marginal increase of 0.1 points over the next two months, the DA hike will be 4%, leading to a total DA of 46%.
These projections highlight the potential impact of the upcoming CPI-IW figures on central government employees' DA, underlining the significance of closely monitoring the CPI-IW trends in the months ahead. As employees eagerly anticipate the release of May 2023 and June 2023 CPI-IW data, the resulting figures will play a pivotal role in determining the final DA hike for July 2023 and its subsequent impact on their finances.