The central government informed Parliament that it is not considering any proposal to merge any portion of Dearness Allowance (DA) with the basic pay of central government employees.
The clarification was provided in a written reply in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary, on the first day of the Winter Session. "No proposal regarding merger of the existing dearness allowance with the basic pay is under consideration with the government at present," the Minister stated.
The reply further explained the purpose of DA: "In order to adjust the cost of living and to protect Basic Pay/Pension from erosion in real value on account of inflation, the rates of DA/DR are revised periodically every 6 months on the basis of All India Consumer Price Index for Industrial Workers (AICPI-IW) released by Labour Bureau, Ministry of Labour and Employment."
The statement comes days after several central government employee unions renewed their demand for an immediate merger of 50 per cent of the accumulated DA with basic pay. With the 8th Central Pay Commission unlikely to take effect before 2026, unions have been pressing for an early DA merger, which would permanently raise basic salary and lead to higher DA calculations in the future.
On October 29, the Union Cabinet approved the Terms of Reference (ToR) for the 8th Central Pay Commission, which will revise pay, allowances and pension for nearly 50 lakh central government employees and an equal number of pensioners. The Commission will be chaired by former Supreme Court judge Justice Ranjana Prakash Desai.
At the Cabinet briefing, Information and Broadcasting Minister Ashwini Vaishnaw had said that the Eighth Pay Commission will submit its recommendations within 18 months and the revised pay structure is likely to come into effect from January 1, 2026.
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