Discussions regarding the 8th Pay Commission are intensifying. In particular, there have been persistent demands for the inclusion of dearness allowance (DA) in the basic pay. For the past few days, it was speculated that the government would merge DA and DR into the basic pay instead of increasing them. The government has now clarified its stance on this matter. Contrary to the expectations of several unions, the government has rejected any proposal to merge the existing dearness allowance (DA) or dearness relief (DR) with the basic pay.
In fact, employee unions argued that the rate at which DA and DR would be increased is insufficient to control inflation in today's times, so they should be merged into the basic pay. This would increase the basic pay, and other allowances like HRA and TA would also be calculated accordingly. Overall, employees' salaries would increase significantly.
In a written reply in the Lok Sabha on December 1, 2025, Minister of State for Finance Pankaj Chaudhary stated that the government has no proposal to merge the existing DA with basic pay. This response was given in response to a question posed by MP Anand Bhadoria, who asked why central government employees and pensioners are currently facing the highest inflation in 30 years, while DA and DR are not matching real-time retail inflation.
After a 3% increase in dearness allowance (DA) and dearness relief (DR) before Diwali this year, the DA for employees and DR for pensioners currently constitute 55% of their basic salary or pension.
DA/DR is revised twice a year based on the All India Consumer Price Index for Industrial Workers (AICPI-IW): first in January and second in July. Employee unions have been demanding that DA be integrated with basic pay to mitigate the impact of rising inflation. However, despite these demands, the government appears committed to the current structure of periodic adjustments rather than a one-time merger.