The central government has clarified that it is not currently examining any proposal to merge Dearness Allowance with basic pay, even as preparations for the 8th Pay Commission move forward. The statement comes shortly after the Centre formally notified the Terms of Reference for the new commission, which will review the salary structure, allowances, and pension benefits for more than 47 lakh central government employees and around 68 lakh pensioners.
Officials indicated that the focus of the 8th Pay Commission remains on assessing existing pay scales, studying economic conditions, and suggesting a revised structure that maintains pay parity and financial sustainability. The clarification regarding the DA–basic pay merger was issued to address rising speculation among employees’ groups, many of whom had anticipated that the government might introduce an interim mechanism to boost monthly take-home pay ahead of the commission’s final recommendations.
Dearness Allowance is revised twice a year to offset inflation for government employees. Over time, the percentage of DA often becomes substantial, and employee unions have long demanded that once DA crosses a certain level, it should be merged with basic pay. Such a merger increases overall salary, raises other allowance calculations, and improves retirement benefits. However, authorities have now made it clear that no such decision is being considered at present.
The 8th Pay Commission is expected to study multiple economic indicators, including inflation trends, fiscal constraints, productivity patterns, and cost-of-living changes across regions. It will also engage with employee representatives and various ministries before finalising its recommendations. The report is likely to be submitted to the government ahead of the next salary revision cycle, which traditionally aligns with the beginning of a financial year.
For now, DA will continue to be increased through periodic revisions, while employees await the broader reforms the 8th Pay Commission is expected to bring.
