• Post last modified:October 18, 2020
  • Reading time:4 min(s) read

The CPI(IW) for the month of July 2020 and August 2020 stood at 336 & 338 respectively. If the same remains stationary at 338 in October 2020, there will be a 3.90% increase in DA for bankers from November 2020.

Enter CPI(IW) at 338 for September and your Basic pay to know exact expected increase in your Salary from November 2020 on the basis of same.

[ DA Rates Calculator for Bank Employees ]

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What is Consumer Price Index for Industrial Workers?

CPI(IW) is Consumer Price Index for Industrial Workers and is published by Labour Bureau on a monthly basis. Previous 12 months data for CPI(IW) is as under. The same may be used to estimate the CPI data for the forthcoming period to find expected DA for bank employees.

Consumer Price Index (Industrial Workers) Base 2001 = 100

MonthCPI(IW)MonthCPI(IW)
July 2019319January 2020330
August 2019320February 2020328
September 2019322March 2020326
October 2019325April 2020329
November 2019328May 2020330
December 2019330June 2020332

Scales of Pay of Bank Employees

Scales of Pay of Bank Employees

What is Dearness Allowance (DA)?

Dearness allowance is paid to Government staff, Public Sector workers & pensioners to alleviate the effect of inflation. The Dearness Allowance is calculated as a percentage of Basic pay and other components of pay like PQP & Special pay. The DA paid to employees is fully taxable.

How the DA for Bank Employees is calculated?

Bank Employees Dearness allowance is calculated based on CPI(IW) is Consumer Price Index for Industrial Workers and is published by Labour Bureau on monthly basis.   The Labour Bureau publish the data on the last day of every month with a time lag of 1 month (for example, data for March is published on 30th April).  The data is published with 2001 as the base year (i.e. CPI(IW) Base 2001=100)

The DA is calculated and revised every quarter using CPI (IW) data as detailed below:

The data for the period from April to June is used to calculate the DA for bank employees for the period from August to October. Let us understand the same with data for the period from April 2020 to June 2020 which is used to find out Bank employees Dearness allowance for the period from August 2020 to October 2020.

The Consumer Price Index (Industrial Workers), Base 2001 = 100, data published by Labour Bureau for April 2020, May 2020 & June 2020 is 329, 330 & 332 respectively.

The DA for bank employees is calculated based on CPI of 1960 and hence the CPI(IW) Base2001=100 is converted into CPI(IW) Base= 1960 by using conversion factors 4.63 & 4.93. In simple words, the latest CPI(IW) data is multiplied by 4.63 & 4.93. Further, the average CPI of 3 months is calculated.

 CPI(IW) Base 2001=100 (A)CPI(IW) Base 1960=100 (A)*4.63*4.93
April 20203297590.72
May 20203307532.55
June 20203327578.20
Average CPI 7540.16

4440 slabs, merged in basic pay in terms of as above as per 10th bipartite settlement, are deducted from Average CPI to find out CPI number for which DA is payable. For the period from August 2020 to  October 2020, the same comes out to be 3100.16 (i.e. 7540.16-4440)

To convert the same into slabs the CPI no is divided by 4 i.e. 3100.16/4 = 775 slabs (ignoring decimals)

In terms of 10th BPS, the Dearness allowance is paid @0.10% for 1 slab and hence the DA payable for the period is 77.50%

The DA for the previous quarter (i.e. from June 2020 to August 2020 was 76.10%, hence there is an increase of 1.40% (77.50 – 76.10)

When the DA of Bank Employees is revised?

The DA of Bank Employees is revised quarterly in February, May, August  & November every year.

What is the historic increase in DA of Bank Employees?

The increase in Bank Employees’ Dearness Allowance during previous years is as detailed under:

Period FromIncrease (%)
August 2016 to October 20163.50
November 2016 to January 20170.10
February 2017 to April 20171.30
May 2017 to July 2017(-)1.30
August 2017 to October 20172.20
November 2017 to January 20183.80
February 2018 to April 20181.10
May 2018 to July 20180.20
August 2018 to October 20181.20
November 2018 to January 20196.60
February 2019 to April 20190.40
May 2019 to July 20193.40
August 2019 to October 20193.60
November 2019 to January 20203.60
February 2020 to April 20204.20
May 2020 to July 20200.20
August 2020 to October 2020 (latest)1.40

Disclaimer

The amount of DA as calculated above are estimates based on CPI(IW) data. The actual amount may vary to some extent depending upon “Special pay” components for some employees which are used for calculation of DA like PQP etc. Further, the actual DA  payable shall be governed by IBA notification in this respect.

Suggested Readings:

Sources

http://labourbureau.gov.in/LBO_indexes.htm

https://www.iba.org.in/iba/bankEmployee/BankEmployeeAction.do

https://www.iba.org.in/circulars/dearness-allowance-for-workmen-and-officer-employees-in-banks-for-the-months-of-august-september-andamp-october-2020-under-x-bps-joint-note-dated-25-_954.html

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