8th Pay Commission BIG update: Modi govt makes MAJOR announcement on DA merger, says there is…

Employees have demanded the merger of Dearness Allowance (DA) and Dearness Relief (DR) with basic pay under the 8th Pay Commission.

8th Pay Commission update: In a setback for nearly 1.2 crore central government employees and retirees, the Union government on Monday said there is no proposal currently under consideration to merge the dearness allowance (DA) or dearness relief (DR) with the basic pay, which has been a long-standing demand of employees.

What did the govt say about DA merger?

Responding to a query on the matter in the Lok Sabha, Union Minister of State (MoS) for Finance Pankaj Chaudhary said the central government has notified the constitution of the 8th Central Pay Commission (8th CPC), and as of now, there is no proposal to merge DA or DR with basic pay.

“No proposal regarding merger of the existing dearness allowance with the basic pay is under consideration with the government at present. In order to adjust the cost of living and to protect basic pay/ pension from erosion in real value on account of inflation, the rates of DA/ DR are revised periodically every six months on the basis of the All India Consumer Price Index for Industrial Workers (AICPI-IW) released by Labour Bureau, Ministry of Labour and Employment,” the minister said in his response.

Chaudhary said the central government has notified resolution dated November 3, 2025, for the constitution of the 8th Pay Commission, and a copy of the notification is enclosed in Annexure-1.

Why employees seek DA merger?

Employees argue that DA increments have failed to keep up with retail inflation over the last three decades, and the allowance has crossed the 50 percent threshold that requires a merger to provide an immediate relief to workers.

It is expected that DA merger would offer immediate relief to over 1.2 crore employees and pensioners by providing a significant hike to salary and pension, as DA has not matched retail inflation for over three decades. Notably, the last DA merger took place ahead of the 6th Pay Commission in 2004, which had resulted in a significant salary hike and enhanced retirement benefits as most allowances and pension components are calculated based on basic pay.

At present, DA and DR stand at 55 percent of the basic pay and pension as the government had recently hiked the DA/ DR by 3% to 55% ahead of Diwali. Dearness allowance (DA) is for central government employees, while dearness allowance (DR) is given to pensioners.

When will govt implement 8th Pay Commission?

Last month, Prime Minister Narendra Modi-led Union Cabinet approved the terms of reference (ToR) of the 8th Pay Commission, which will benefit 50 lakh central government employees and 69 lakh pensioners and will have implications on the emoluments of the staff of state governments.

If we go by the implementation of previous pay commissions, the government usually takes about 18 to 24 months to implement the recommendations of the commission. Thus, its unlikely that 8th Pay Commission would be implemented before mid-2027, while reports suggest that the next CPC implementation might be pushed back to early 2028.