Rising food prices push retail inflation up in Dec

Food items pushed up retail price index-based inflation in December 2010, besides the more tracked wholesale price index, a point the Reserve Bank of India (RBI) will bear in mind while deciding on its monetary stance tomorrow.

While inflation for the items consumed by rural labour (CPI-RL) rose to 8.01 per cent in December from 6.95 per cent in the previous month, the one for agricultural labour (CPI-AL) moved up to 7.99 per cent from 7.14 per cent over the period.

Costlier onions, milk and other essential items resulted in higher inflation numbers, as was the case with the wholesale price index-based inflation number, which rose to 8.43 per cent from 7.48 per cent over the month.

The retail price inflation, in fact, had started moderating by November, as could be seen from the movement of the numbers for items consumed by industrial workers (CPI-IW), before the spurt in prices of food items, particularly onions, jacked up the figures.

CPI-IW (Consumer Price Index for Industrial Workers)-based inflation came down to 8.33 per cent in November from 9.7 per cent in the previous month.

This figure is all set to go up once the figure for December is out on January 31.

In its report on Macroeconomic and Monetary Developments, released a day ahead of the monetary review, RBI called this just “some reversal” of a generally moderating trend.

“Inflation, as measured by various consumer price indices, generally moderated during 2010-11, with some reversal witnessed in December...Various measures of inflation remained in the range of 8-8.4 per cent in November/December, 2010,” the report said.

The RBI, however, noted that all inflation numbers, based on retail as well as wholesale prices, remained elevated.

While the divergence between headline inflation last year was large, it has narrowed down significantly this year.

It is because food prices have much higher weight in the retail price based indices than just 14.34 per cent in WPI and now it is mainly food items that are leading to rise in inflation numbers.

“While the extent of divergence between WPI and CPI inflation narrowed significantly, both remained elevated leading to significant welfare costs,” RBI said. There are linkages between government outgo on heads like dearness allowance (DA), NREGA and retail inflation.

While DA for the central government employees is based on CPI (IW), NREGA payments are linked to CPI (AL).

Source : Business Standard

Dearness Allowance Percentage Overview for Central Government Employees

Dearness Allowance Percentages - Overview

All of us waiting for Dearness allowance percentage for January 2011, as per AICPIN calculation, we are going to get 6% Dearness allowance from January 2011.

Let us see the past Dearness allowance percentage for Central Government Employees.

Here is the DA Table from 1.1.1996 to 1.1.2004 :

As on	Rates of DA (%)
1.1.1996	0
1.7.1996	4
1.1.1997	8
1.7.1997	13
1.1.1998	16
1.7.1998	22
1.1.1999	32
1.7.1999	37
1.1.2000	38
1.7.2000	41
1.1.2001	43
1.7.2001	45
1.1.2002	49
1.7.2002	52
1.1.2003	55
1.7.2003	59
1.1.2004	61

CHART

(Note : Click image to enlarge)

The Fifth CPC had also recommended that

• Dearness allowance equal to 50% of the basic pay should be converted as dearness pay each time the Consumer Price Index increased by 50% over the base index.
• The dearness pay was to be counted as basic pay for all purposes, including retirement benefits.
• The Government allowed merger of dearness allowance equal to 50% of the basic pay into dearness pay to be counted as pay for all purposes barring TA/DA, LTC and entitlement for Government housing w.e.f. 1.4.2004.

The Government merged 50% of the DA with basic pay w.e.f. 1.4.04 and the dearness allowance continued to be calculated with reference to the AICPI (IW) average as on 1st January 1996 of 306.33 without changing the base consequent to the merger. Accordingly, DA at following rates was sanctioned by the Government from 1.7.04 till 1.7.07

As on	Rates of DA (%)
1.7.2004	14
1.1.2005	17
1.7.2005	21
1.1.2006	24
1.7.2006	29
1.1.2007	35
1.7.2007	41

CHART

(Note : Click image to enlarge)

The decision taken by the Government on the recommendations of the Sixth Central Pay Commission relating to DA, to decide that the DA admissible to all categories of Central Government employees shall be admissible from the dates mentioned below at the following rates:

As on	Rates of DA (%)
1.1.2006	0
1.7.2006	2
1.1.2007	6
1.7.2007	9
1.1.2008	12
1.7.2008	16
1.1.2009	22
1.7.2009	27
1.1.2010	35
1.7.2010	45

CHART

(Note : Click image to enlarge)

Let us wait for January 2011 Dearness Allowance Percentage.

Kerala - One more DA instalment for State staff

Government employees would get one more instalment of dearness allowance in their salaries with effect from February, 2011, Finance Minister T.M. Thomas Isaac told the Assembly on Tuesday.

Replying to the discussion on supplementary demand for grants for a total sum of Rs.64 crore from some government departments, he said the government planned an expense of Rs.1,000 crore for road works during the remaining months of this financial year.

This expense would be in addition to that earmarked in the Budget for the purpose. He also announced the government's intention to freshly allocate Rs.20 crore each for the Muziris Heritage Project and Thalassery Heritage Project during the current financial year.

A sum of Rs.10 crore would be allocated for heritage works along the canals of Alappuzha too, he said. There would also be an additional allocation of Rs.10 crore for relief measures for fishermen and workers in the beedi and coir sectors. An additional sum of Rs.25 lakh would be given to each MLA for road repair in their constituencies.

Source : The Hindu