Monday, January 18, 2016

Expected DA calculation- Fitment factor of 7th CPC

Expected DA Calculation will play vital role in determining Fitment Factor of 7th CPC

Expected DA from January 2016 likely to change the Fitment Factor of 7th CPC.

At the end of the Sixth CPC Regime all the Central Government servants are at the verge of receiving their last installment of Dearness Allowance in Sixth Pay Commission. Almost the DA from January 2016 will be finalized after the release of AICPIN for the month of December 2015. The eleven months AICPIN Points released from January 2015 to November 2015 by Labour Bureau suggests that there is a possibility to get 6 to 7 percent hike in DA from January 2016. But the AICPIN for the Month of December will determine the exact rate of hike in Dearness Allowance from Jan 2016.
The rate of DA, as expected by 7th Pay commission, if arrived at 125 % with 6% hike there will be no change in Fitment factor. Because the Fitment Factor 2.57 is arrived by adding the 125% DA, at the rate anticipated on 1.1.2016. If AICPIN for December 2015 necessitates changing the expected DA from 125% to the level of 126 % with hike of 7%, then there will be certainly an impact in the Fitment Factor of 7th CPC. In that case, there will be change in decimals of fitment factor
So, Expected DA from January 2016 will play vital role in determining Fitment Factor if it increases from expected level of 125% to 126%.
What will be the fitment factor if DA reaches at 126% from January 2016.
When it was anticipated that the DA will be 125 % from January 2016, The 7th Pay Commission stated in the Report that “This fitment factor of 2.57 is being proposed to be applied uniformly for all employees. It includes a factor of 2.25 on account of DA neutralization, assuming that the rate of Dearness Allowance would be 125 percent at the time of implementation of the new pay. Accordingly, the actual raise/fitment being recommended is 14.29 percent”
If 126% of DA has to be taken into account for arriving Fitment factor with the recommended 14.29 % increase.
The Revised Fitment Factor will be as follows
The fitment factor after DA neutralization = 2.26
Increase of 14.29% over 2.26 = 0.32
Total (2.26+0.32) = 2.58
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