8th Pay Commission: DA Merged into Basic Salary; BIG Gift for Central Government Employees?

New Delhi: Central government employees are awaiting the recommendations of the 8th Pay Commission. The Pay Commission has already initiated a series of meetings with various organizations representing central employees to formulate its recommendations. Employee organizations are advocating for the merger of the Dearness Allowance (DA) directly into the basic salary. The question now arises: why exactly is this demand being made? Let us attempt to understand the rationale behind it.

What Does This Imply?

The demand to merge the DA with the basic salary signifies that central employee organizations wish to have the current Dearness Allowance incorporated directly into the basic pay structure. According to these organizations, this step is essential because several components of an employee's remuneration—including the House Rent Allowance (HRA), Transport Allowance, pension, and annual increments—are linked to the basic salary. Consequently, once the DA becomes an integral part of the basic salary, the entire salary structure witnesses a substantial upward revision. Simply put, the employees argue that inflation has remained persistently high over several years, and the Dearness Allowance has grown to such an extent that it should no longer be treated as a separate, distinct component of the salary.

The primary catalyst behind this demand is the significant surge in the cost of living. According to a memorandum submitted to the 8th Pay Commission by the All India NPS Employees Federation, the Dearness Allowance had reached approximately 58% by December 31, 2025. The Federation argued that such an elevated level of DA serves as irrefutable proof of how drastically household expenses and inflation have risen over the past few years. In its memorandum, the Federation asserted that the Dearness Allowance clearly demonstrates that the cost of living has escalated considerably, resulting in an erosion of people's purchasing power.

What is the Demand Regarding the Family Unit?

According to the Federation, the current minimum basic salary of ₹18,000—established under the 7th Pay Commission—was predicated upon outdated assumptions and a three-member family unit model. The Federation has proposed a revision of this family unit structure, advocating for its expansion to a five-unit model, and has called for a recalculation of the minimum wage in accordance with this revised framework. Under its proposed formula: ₹6,000 x 5 family units = ₹30,000. Subsequently, the Federation proposed adding the existing DA—currently at 60%—to this revised figure, thereby raising the total to approximately ₹47,400. Taking into account the costs associated with improved nutrition and consumption, the employee organization argued that the prescribed minimum salary should fall within the range of ₹55,000 to ₹60,000.