New Delhi: The demand to merge Dearness Allowance (DA) with basic salary under the upcoming 8th Pay Commission has been widely discussed in recent weeks. However, the government has now put an end to speculation.
On 1 December 2025, Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha through a written reply that the government currently has no proposal to merge DA with basic pay.
This response was given to MP Anand Bhadauria, who raised concerns about rising inflation and the financial pressure on central government employees and pensioners.
Why the Demand for Merger Grew Stronger?
Employee groups argue that DA and DR are not matching real-time retail inflation, even though prices are rising at the highest pace seen in decades. Many unions renewed their demand in November, asking the government to merge DA with basic pay once it touches 50 percent—a formula followed in earlier commissions.
The expectation grew even stronger once discussions on the 8th Pay Commission formally began.
Expert Views on Interim Relief and Pay Structure
Tax experts believe the government will act very cautiously regarding any interim relief before the 8th Pay Commission recommendations are finalised.
However, expectations around the fitment factor remain high. The fitment factor determines how employees’ basic pay and future DA/DR are calculated. If it rises from the current 2.57 to 3.0, the minimum basic pay could increase by 15–20 percent, directly boosting allowances like HRA and TA.
Pensioners would also benefit, as pensions are calculated as 50 percent of basic pay.
Uncertainty Ahead as 7th CPC Term Ends
The present 7th Pay Commission cycle ends on 31 December, creating uncertainty about what happens next. It is not yet clear whether DA/DR will continue under the existing formula or be paused until the 8th Pay Commission submits its recommendations.
Government employees are closely watching for the next official update, as it will shape the future of their salaries, pensions and allowances under the new pay revision system.
