DA Hike Update: Central Government Rejects Demand to Merge DA with Basic Pay, Impacting Millions of Employees

No Plan to Merge Dearness Allowance with Basic Salary, Says Finance Ministry

In a recent written reply to the Rajya Sabha, the central government made it clear that there are no plans to merge Dearness Allowance (DA) with the basic salary of government employees, nor Dearness Relief (DR) with pensions. This decision is a setback for lakhs of central government employees and pensioners who were hoping for a major pay structure revision.

Minister of State for Finance, Pankaj Chaudhary, stated that no such proposal is under consideration. This comes amid increasing pressure from employee unions, which had demanded that once DA exceeds 50%, it should be merged with the basic pay. However, the government has opted not to revive the practice that was last implemented based on the Sixth Pay Commission recommendations.

Government Revises DA Twice a Year, 8th Pay Commission on the Horizon

The government reviews and revises DA and DR rates biannually to offset the impact of inflation on salaries and pensions. While the government has confirmed the formation of the 8th Central Pay Commission (CPC), no timeline has yet been announced for the submission of its report.

Finance Minister Nirmala Sitharaman has previously noted that more than 3.6 million central government employees and pensioners are expected to benefit from the upcoming CPC. However, merging DA into the basic pay was not part of the commission’s immediate agenda.

Unions Push for Economic Security Amid Rising Inflation

Employee organizations, including the National Council of Joint Consultative Machinery (NC-JCM), have actively lobbied for the merger of DA with basic salary. In a meeting with the Department of Personnel and Training (DoPT), the unions argued that since DA has surpassed the 50% threshold, it should be integrated into the basic pay structure for better financial security.

Despite these demands, the government remains firm on its stance. MoS Pankaj Chaudhary emphasized that DA/DR are calculated and disbursed specifically to shield employees and pensioners from inflationary pressure, and are adjusted regularly—every six months—to maintain their efficacy.

The government also cited the potential fiscal burden as a key reason for rejecting the merger. Integrating DA with basic pay would result in a significant long-term increase in salary outlays, pensions, and other associated benefits.

Conclusion

While central government employees continue to benefit from periodic DA hikes, the much-anticipated merging of DA into basic pay remains off the table for now. The government assures continued commitment to employee welfare through routine DA/DR updates, but a structural overhaul of the pay system will have to wait.