DA is the most important allowance in existing Pay, if you look at the current basic DA is higher.
7th CPC Basic fixation has biggest influenced with the DA value. For this reason, after 7th Pay commission implementation, Central government staffs are looking out for how DA would be available.
In 6th CPC, everyone know how DA was calculated
In the above formula 115.76 was fixed based on the below interpretation
After implementation of Sixth Pay Commission report, Government ordered that the dearness allowance has to be calculated based on All India Consumer Price Index for Industrial Workers (CPI¬IW index) with the base year 2001-100. So, DA with effect from the period 1.1.2006, has to be calculated using average Price CPI-IW index of 536 for 2005 (base 1982-100) adjusted to the base year 2001-100 by dividing the same with the Linking Factor between 1982 and 2001 Series which is 4.63. As a result, the average consumer price index (Industrial workers) for 12 months in 2005 (base 2001-100) was worked out to 115.76.To calculate Dearness Allowance with effect from Jan-06, we need the average of monthly All India Consumer Price Index (IW) with the base year
2001-100 for the preceding 12 months and apply the same in the following formula:
DA – (Average AICPI-115.76)x 100/115.76
For example, to calculate the DA for 01/01/2007, we find that the average AICPI in the year 2007 -118.95. So, D.A. as on 01/01/2007 – (118.95 – 115.76)*100 /115.76 = 2%.
In 7th CPC entire calculation can change if we use the same combination. Let’s see, how this can change?
Based on it, in 2015 (base 2001 =100) Average is 261.40 and by using the same following formula the expected (assumed) DA in 7th CPC would be (261.4-261.4)*100/261.4 = 2%
In case the base year 2011-100 is used in 7th CPC, then the linking factor will be changed to calculate the DA Value.
SOURCE - govtempdiary