Government Clears Air on 8th Pay Commission: No Plan to Merge DA With Basic Pay — Here’s What It Means

Kerala | Dec 02, 2025 The central government has officially clarified that it has no proposal under consideration to merge Dearness Allowance (DA) with the basic pay of central government employees. This announcement comes at a time when many employee unions have been pushing hard for a 50% DA–basic pay merger ahead of the 8th Pay Commission rollout. The statement was issued on Monday in the Lok Sabha, marking the first major clarification after the government recently announced the Terms of Reference (ToR) for the 8th Central Pay Commission. The reply was given by Pankaj Chaudhary, Minister of State for Finance, who stated that the government is currently not examining any plan to combine any part of the existing DA with basic pay. This response came as Parliament's Winter Session began, setting the tone for what many expected to be a heated debate around pay structure reforms. According to the minister’s written reply, DA and Dearness Relief (DR) revisions will continue to follow the existing formula. They are revised every six months, based on the All India Consumer Price Index for Industrial Workers (AICPI-IW) provided by the Labour Bureau. This adjustment is aimed at protecting employee salaries and pensions from inflation and the increasing cost of living. This clarification arrives at a time when various government employee unions have been vocal about their concerns. Many have demanded that the Centre merge 50% of the DA with basic pay immediately. Their argument: with the 8th Pay Commission expected to take effect only from 2026, an early merger would raise the basic pay and thereby increase the future DA amounts, since DA is calculated as a percentage of the basic salary. The government, however, has made it clear that such a move is not on the table at present. Earlier, on October 28, the Union Cabinet approved the Terms of Reference for the 8th Pay Commission. The Commission will be chaired by former Supreme Court judge Ranjana Prakash Desai, and it has been given 18 months to submit its recommendations. As per Information & Broadcasting Minister Ashwini Vaishnaw, the new pay structure is likely to take effect from January 1, 2026. The 8th Central Pay Commission is responsible for examining and recommending changes in salary structure, retirement benefits, and other service conditions for nearly 50 lakh central government employees. The government had first announced its formation in January 2025, continuing the tradition of constituting a new Pay Commission approximately every ten years. While the Pay Commission is expected to bring a fresh round of revisions, improvements, and restructurings, the government's latest statement suggests that employees will have to wait until the Commission's recommendations are finalized. For now, DA and DR will continue to be revised using the existing index-based system, without being combined into the basic pay. This development essentially answers the “what” and “who” of the current discussion — the government, through the Ministry of Finance, has clarified its position. The “when” is tied to the Commission's timeline, expecting implementation by 2026. The “why” lies in maintaining the established process: the government’s current stance shows that it prefers sticking to the existing DA revision mechanism rather than introducing a structural change before the Pay Commission submits its findings. As debates continue and employee unions maintain pressure, the coming months may still see further discussions — but for now, the government’s position is firm: no DA–basic pay merger is being planned. Government Clears Air on 8th Pay Commission: No Plan to Merge DA With Basic Pay — Here’s What It Means The central government has confirmed that it currently has no proposal to merge Dearness Allowance (DA) with the basic pay of central government employees. This clarification came in a written reply by Minister of State for Finance Pankaj Chaudhary in the Lok Sabha during the Winter Session. The government stated that DA and Dearness Relief (DR) will continue to be revised every six months based on the All India Consumer Price Index for Industrial Workers. This ensures that employee salaries and pensions are protected from inflation and rising living costs. This announcement comes shortly after the Terms of Reference for the 8th Central Pay Commission were approved. The Commission, headed by former Supreme Court judge Ranjana Prakash Desai, has 18 months to submit its recommendations. The revised pay structure is expected to come into effect from January 1, 2026. Employee unions had recently urged the Centre to merge 50% DA with basic pay, hoping it would boost salaries ahead of the Pay Commission’s implementation. However, the government has made it clear that such a move is not being considered at this time.