With discussions around the 8th Central Pay Commission (8th CPC) gathering momentum across ministries, union offices and Parliament corridors, the Centre has moved to clarify one of the most debated questions in recent weeks: whether dearness allowance (DA) and dearness relief (DR) will be merged with basic pay as an interim measure.
With nearly one crore central government employees and pensioners anxiously tracking every development, expectations of a pre-commission relief package had been steadily rising, fuelled by statements from staff bodies, circulating union circulars and a growing chorus calling for inflation-linked corrections.
Government Denies DA-Basic Pay Merger Proposal
Against this backdrop, the Union government has now stated unequivocally that no such proposal is under consideration.
Responding to a written question in the Lok Sabha on December 1, Minister of State for Finance Pankaj Chaudhary confirmed that the government is not examining any such move, reported Moneycontrol.
“No proposal regarding merger of the existing dearness allowance with the basic is under consideration with the government at present,” he said.
Chaudhary was replying to a query raised by MP Anand Bhadauria, who highlighted that central employees and pensioners have been battling the effects of unprecedented price rise over the last three decades.
According to him, the DA and DR disbursed over the years have not kept pace with real retail inflation, weakening the purchasing power of workers and retirees.
The question also comes against the backdrop of rising expectations surrounding the 8th CPC, for which the Terms of Reference (ToR) were notified earlier in November. Staff associations have been vocal that the merger of 50 per cent DA with basic pay should be included as an interim measure.
What Changes Unions Want In ToR
Multiple organisations representing central government staff have argued that the ToR is incomplete without addressing the immediate concerns of both employees and pensioners. Their demands include:
- Merger of 50 per cent DA/DR with basic pay or pension.
- Clear implementation timeline for the 8th CPC, ideally from January 1, 2026.
- Removal of distinctions between different categories of pensioners.
- Restoration of the Old Pension Scheme (OPS) and scrapping of NPS/UPS.
- Release of 18 months of pending DA/DR from the Covid-19 period.
- Improvements in the fitment factor and Pay Matrix.
- Relaxation in compassionate appointments and filling lakhs of government vacancies.
Unions say the government’s silence on key elements leaves scope for delay, even as the 10-year cycle suggests that the next revision is due in 2026.
Why DA Merger Matters?
The renewed push for DA merger is rooted in historical precedent. The last such merger happened in 2004 before the introduction of the 6th Pay Commission, leading to a notable rise in take-home salaries and pension calculations. Staff bodies argue that the current DA levels have already crossed the threshold that traditionally triggered a merger.
From a financial perspective, a merger would expand the basic pay slab. Since most allowances, housing, transport, pension base, gratuity and provident fund contributions are indexed to basic pay, this creates a cascading benefit. Economists say this explains why the DA–basic merger consistently tops union agendas when inflationary pressures mount.
Unions argue that with inflation rising and wage stagnation becoming more visible across grades, interim measures are essential. While the government has confirmed there is no DA-merger proposal under consideration, employee bodies are hopeful that the discussion has only begun.
With the Winter Session of Parliament underway, the 8th CPC debate has become a central storyline for nearly one crore central government employees and pensioners. Workers say that clarity in the early stages of ToR interpretation plays a vital role in ensuring that the 2026 pay revision does not suffer procedural delays.
For pensioners in particular, DR-linked income is tightly tied to monthly household budgets. Any uncertainty around DA or DR adjustments directly affects their financial security.
As legislative questions, union memoranda, and departmental assessments continue to pile up, the government’s stance will likely determine the pace of the 8th CPC process over the next year.
For now, the Centre’s clarification rules out an immediate DA–basic merger, but the broader questions around pay revision, pension equity and inflation-linked allowances remain very much alive.
With millions watching closely, the coming months will reveal whether the 8th Pay Commission can meet expectations—or whether the debate will sharpen as 2026 approaches.
