Government Rules Out DA–Basic Pay Merger; Clarifies Allowance Framework

The Finance Ministry has stated in Parliament that it is not evaluating any proposal to merge dearness allowance with the basic pay of central government employees.

The clarification comes at a time when DA stands at 58% and expectations had risen following the announcement of the 8th Pay Commission’s Terms of Reference. The ministry also addressed queries on inflation adjustments and pension-related allowances.

Government Declines Proposal to Merge DA with Basic Pay

Responding to a parliamentary question, the Minister of State for Finance said the government is not considering a merger of the existing dearness allowance with basic pay.

Employee groups had renewed their request after DA crossed the 50% mark earlier in the year.

How DA Is Adjusted for Employees and Pensioners?

The minister explained that DA and dearness relief are revised every six months to reflect changes in the All-India Consumer Price Index for Industrial Workers.

These adjustments aim to support employees and pensioners against the impact of inflation on real income.

Query on 8th Pay Commission Notification

The government confirmed that it has issued the notification dated 3 November 2025 establishing the Eighth Central Pay Commission.

The commission will review pay structures, allowances, and related matters.

What DA Represents and How It Is Applied?

Dearness allowance is provided as a cost of living adjustment based on inflation trends. It is calculated as a percentage of an employee’s basic pay and revised twice a year.

Impact of Merging DA with Basic Pay

As per news reports, if DA were merged with basic pay, the revised basic salary would increase, influencing future increments and allowances. Although there is no immediate cash benefit, total compensation would eventually rise due to the higher base.

Read More: 8th Pay Commission: What’s Driving Expectations of a 1.8–2.57 Fitment Factor?

Conclusion

The government’s responses indicate that DA will continue to be revised through the established formula rather than merged with basic pay. While employees have highlighted inflation pressures, the authorities appear committed to maintaining the current framework until further review under the 8th Pay Commission.

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