The central government on Monday, December 1, provided a definitive clarification to Parliament regarding a long-standing demand from employee unions: it is not currently examining any plan to combine the Dearness Allowance (DA) or dearness relief (DR) with the basic pay of central government employees.
The clarification was delivered by Minister of State for Finance, Pankaj Chaudhary, in a written response to a query in the Lok Sabha as the Winter Session of Parliament began.
“No proposal regarding merger of the existing dearness allowance with the basic pay is under consideration with the government at present,” the reply stated.
DA/DR Mechanism Explained
The government emphasized that the existing mechanism for DA/DR revisions is sufficient to protect the real value of employees’ salaries and pensions against inflation.
- Purpose: DA/DR is intended “to adjust the cost of living and to protect Basic Pay/Pension from erosion in real value on account of inflation.”
- Revision Frequency: The rates of DA/DR are revised periodically every six months based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), which is released by the Labour Bureau, Ministry of Labour and Employment.
Context of the 8th Pay Commission
This clarification comes just days after the government issued the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC).
Employee unions have recently been urging the Centre to immediately merge 50% of the DA with the basic pay. This merger would significantly increase the employees’ basic salary, meaning that all future DA revisions would be calculated on the higher, revised amount.
- 8th Pay Commission Head: The new commission will be headed by former Supreme Court judge Ranjana Prakash Desai.
- Timeline: The 8th Pay panel is expected to submit its recommendations within 18 months and is likely to come into effect from January 1, 2026.
Despite the quick formation of the 8th CPC, employee groups continue to advocate for the DA-basic pay merger to provide interim relief, a request that the government has currently denied.