The government has clarified that there is no plan at present to merge Dearness Allowance (DA) or Dearness Relief (DR) with the basic pay of central government employees and pensioners, even as the 8th Central Pay Commission (CPC) begins its review.
The statement was made in Parliament on December 2 by Pankaj Chaudhary, Minister of State for Finance, in response to questions from MPs. He said the existing system of revising DA and DR twice a year based on the All India Consumer Price Index for Industrial Workers (AICPI‑IW) would continue, protecting salaries and pensions against inflation.
The 8th CPC, formally constituted in November 2025, is tasked with reviewing pay structures, allowances, pensions, and other service-related benefits for around 50 lakh central employees and 65 lakh pensioners. The Commission’s report is expected within 12–18 months, with recommendations potentially taking effect from January 2026.
Employee unions and pensioner groups had renewed demands for an interim merger of DA with basic pay, arguing that the move would boost take-home salaries and increase benefits such as House Rent Allowance (HRA) and pensions. DA recently crossed the 50% mark, which added urgency to their demand.
While the government’s clarification keeps the current pay structure intact, the 8th CPC will now deliberate on broader reforms, including pay matrices, allowances, and pension revisions. Pensioners also stand to benefit, as the Commission’s Terms of Reference include reviewing pension structures, providing clarity on long-standing concerns.
For now, DA/DR will continue to provide inflation protection, and any structural changes will be considered only after the 8th CPC submits its recommendations. Employee groups are expected to monitor the process closely and push for reforms once the Commission’s report is tabled.
This development highlights the government’s cautious approach: ensuring current pay safeguards remain intact while giving the 8th CPC the mandate to propose long-term changes for employees and pensioners.
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