Explained: DA Merger and Loading of 2.50 Percent

 

Dear Friends,

 

Finally on 22^nd July 2020 MOU was signed between IBA and UFBU for 11^th BPS and certain issues like DA merger (@ CPI 6352), Basic Pay loading (2.5%) are finalized.

Since then there is lot of confusion/discussion about how to work out loading factor or new Basic Pay (BP) scale.

 

This is an attempt to explain the concept of:

 

1. DA merger

 

2. Loading of 2.5% on BP

 

 

DA MERGER

 

1] What is CPI 6352? : Firstly let us understand what CPI 6352 is. Here CPI means Consumer Price Index with base year as 1960. In simple language it means what was costing Rs.100/- in 1960 is costing Rs. 6352 in Nov 2016 (CPI 6352 is as on 1^st Nov 2016). This CPI is worked out on the basis of average prices of number of certain commodities and services used by common man in daily use.

 

2] How is DA calculated for Banking Industry? For Banking industry DA is calculated every quarter based on quarterly average of CPI of three months (i.e. Jan-Mar, Apr-Jun, Jul-Sep, Oct-Dec). For example based on quarterly average of Jan+Feb+Mar Consumer Price indexes, DA rate will be calculated for the quarter May-Jun-Jul ( since Mar Index figures will be available by end of April this effect is given from May )

 

 

Indexes for the months of	DA calculated and paid in the months of
January, February, March	May , June, July
April, May, June	August, Sept. October
July, August, Sept.	November, December, January
October, November, December	February, March, April

 

As per 10^th BPS DA is calculated as 0.10% for every 4 points rise over CPI 4440

 

 

For our present case we will take the average CPI of Jul to Sept 2016 quarter which is 6353. Based on this average, DA will be calculated for quarter beginning from 1^st Nov 2016 as under:

 

 

Average CPI for the quarter	6353
Less merger level of CPI for 10th bps	4440
Excess points over 4440	1913
Number of slabs @ one slab for every 4 points ( i.e. 1913/4 )	478.28
Number of slabs for DA calcualtion ( rounded off )	478
DA rate @ 0.10% for 478 slabs	47.8%

 

 

Now at the time of every BPS (beginning from 1^st November) it is the practice to merge DA at one year previous applicable average CPI. Accordingly for 11^th BPS beginning from 1^st November 2017, DA merger is fixed at average CPI applicable for 1^st November 2016 which is 6352(rounded @4 from 6353). So DA @47.8% will be merged to Basic Pay before arriving at New Basic Pay scale.

 

 

LOADING OF 2.5% ON BASIC PAY

 

1] What is 2.5% Loading? In the MOU signed on 22^nd July it has been agreed to increase the wage bill by 15%. This increase from 1^st November 2017 is based on wage bill of 31^st March 2017. Out of which 2.5% is allocated for Basic Pay. It means 2.5% of (Basic Pay + DA as on 31^st March 2017) will be added to the figure we have calculated earlier on account of DA merger (i.e. BP + DA @47.8%).

 

For our calculation we take some important DA rates as under:

 

		10th BPS	11thBPS
DA rates as on 1st November 2016	CPI 6353	47.8%	-
DA rates as on 31st March 2017	CPI 6315	46.9%	-
DA rates as on 1st November 2017	CPI 6505	51.6%	2.66%
DA rates as on 1st July 2020	CPI 7486.9	76.1%	19.81%

 

Now we will arrive at New Basic Pay for Officers/Clerical/Sub-staff for 1^st stage of BP Scale:

 

 

#	Particulars	OF1	CK	SS
A	1st  stage of Basic Pay scale as per 10th  BPS	23700	11765	9560
B	DA merger @ CPI 6352 @ 47.8%  = A*47.80%	11328.60	5623.67	4569.68
C	DA as on 31st  March 2017 @ 46.9% = A*46.90%	11115.30	5517.79	4483.64
D	2.5% loading = (A+C)*2.50%	870.38	432.07	351.09
E	Total = A+B+D	35898.98	17820.74	14480.77
F	New Basic Pay (1st stage) as per 11th BPS	35900	17820	14480

 

As per above formula new Basic Pay will be calculated and rounded off to 5/10 at upper or lower level to suit the overall stage-wise increment structure. Accordingly I have prepared Basic Pay structure for entire pay scale of Officers and Award Staff and the same has been provided in “New DA and Basic” Post. Final calculation of pay scale as per 11^th BPS will differ to the extent of Rs. 5 to Rs. 50 on account of stage-wise rounding adjustment.

 

 

2] New DA Rates for 11^th BPS: New DA rates as per 11^th BPS at merger level 6352 will be calculated as under:

 

As per 11^th BPS DA is calculated as 0.07% for every 4 points rise over CPI 6352

 

#	Particulars	Factor	Nov 17 to Jan 18	May 20 to July 20
A	Average CPI for the quarter		6505	7486.9
B	Less merger level of cpi for 11th bps		6352	6352.0
C	Difference	(A-B)	153	1134.9
D	Number of slabs @ one slab for every 4 points	(C/4)	38.25	283.73
E	Number of slabs for da calcualtion		38	283
F	Da rate @ 0.07% for 38 / 283 slabs	(Dx0.07%)	2.66	19.81

 

Ready Chart of DA for 11^th BPS upto July 2020

Quarter	Average CPI for the Quarter	Difference over 6352	Difference divided by 4	No of slabs	DA@ 0.07%
Nov 2017 to Jan 2018	6505	153	38.25	38	2.66
Feb 2018 to Apr 2018	6551	199	49.75	49	3.43
May 2018 to Jul 2018	6559	207	51.75	51	3.57
Aug 2018 to Oct 2018	6604	252	63	63	4.41
Nov 2018 to Jan 2019	6871	519	129.75	129	9.03
Feb 2019 to Apr 2019	6885	533	133.25	133	9.31
May 2019 to Jul 2019	7023	671	167.75	167	11.69
Aug 2019 to Oct 2019	7167.33	815.33	203.83	203	14.21
Nov 2019 to Jan 2020	7311	959	239.75	239	16.73
Feb 2020 to Apr 2020	7479.29	1127.29	281.82	281	19.67
May 2020 to Jul 2020	7486.90	1134.90	283.73	283	19.81

 

 

Note: Your New Basic Pay as per 11^th BPS will be approx. 151.47% of your Old Basic Pay as per 10^th BPS. At the time of 10^th BPS, New Basic Pay was 163.41% of old Basic Pay as per 9^th BPS. This is due to the fact that at the time of 10^th BPS, DA rate at the merger level was @60.15% as against 47.8% this time. Due to which in 10^th BPS, BP was 163.41% of old BP in spite of lower loading factor of 2%.

 

References and Credits: This document is prepared by MR. SUDHIR MULHERKAR, Ex-Sr. Mgr (I.T.), Bank of India, HO