In a written response to the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the government does not contemplate any proposal for merger of the existing DA with the basic pay of central government employees.
He explained that the DA system is devised to compensate for cost living and prevents erosion in basic pay and pensions due to inflation. DA and DR rates, hence, get revised every six months on the release of the All India Consumer Price Index for Industrial Workers by the Labour Bureau under the Ministry of Labour and Employment.
Employee Unions Demand Early DA Merger with the 8th Pay Commission
In recent weeks, several employee unions have requested that the government immediately merge 50% of the DA with basic pay, arguing that such a merger would increase the basic salary and ensure that future DA calculations are computed on a higher amount. Since the 8th Pay Commission is expected to submit its recommendations only after 2027, these unions are advocating for an early merger to boost salaries without waiting for the commission’s final report.
Terms of Reference for the 8th Pay Commission
The Union Cabinet approved the Terms of Reference for the 8th Pay Commission on October 28, 2025. It is entrusted with the responsibility to review salaries of about 50 lakh central government employees. The commission will be headed by former Supreme Court judge Ranjana Prakash Desai. Information & Broadcasting Minister Ashwini Vaishnaw said the commission is expected to submit its recommendations within 18 months, with the revised pay structure likely to take effect from January 1, 2026.
Background of the 8th Pay Commission
In January 2025, the formation of the 8th Central Pay Commission to examine and suggest changes in the salaries, allowances, and other benefits of central government employees was announced.
Central Pay Commissions are set up from time to time to look into various issues related to emoluments, retirement benefits, and service conditions, and to recommend upward adjustments where necessary. Traditionally, recommendations of these commissions are accepted about once in ten years.
Also Read: 8th Pay Commission: Government Planning Big Salary Overhaul for Central Employees
