Central government employees regularly receive Dearness Allowance (DA) hikes to help offset inflation. But now, as discussions around the 8th Pay Commission gather pace, employee unions are pushing for something much bigger, itself.
The demand has emerged during the submitted by employee organisations, including the All India NPS Employees Federation (AINPSEF).
In its continuing exclusive coverage of the discussions, IndiaToday.in has learnt that unions believe the current level of DA reflects how sharply the cost of living has risen over the years and should now become part of the revised salary structure itself.
The issue is important because merging DA into basic pay could directly affect salaries, allowances, pensions and retirement benefits for lakhs of central government employees.
Dearness Allowance, commonly known as DA, is an additional amount paid to government employees and pensioners to reduce the impact of inflation.
Since prices of essential goods and services keep rising, the government revises DA periodically so that employees can partly maintain their purchasing power.
DA is usually revised twice a year based on inflation data.
At present, central government employees receive DA separately from their basic salary.
When unions demand a DA merger, they are essentially asking the government to absorb the existing DA into the basic salary itself.
This is significant because many salary components are linked to basic pay, including:
So once DA becomes part of the basic pay, the overall salary structure rises substantially.
In simple terms, employees say that inflation has remained high for years and DA has increased so much that it should no longer remain a separate component.
The main reason behind the demand is the sharp rise in living costs.
According to the memorandum submitted by the All India NPS Employees Federation to the 8th Pay Commission, DA had reached around 58% by December 31, 2025.
The federation argued that such a high DA level itself shows how much household expenses and inflation have increased over the years.
“Moreover, the Dearness Allowance (DA), which has reached approximately 58% as on 31st December 2025, clearly indicates a substantial increase in the cost of living and erosion in purchasing power,” the federation stated in its memorandum.
Employee bodies argue that while DA hikes provide temporary relief, they do not fully address the broader increase in expenses related to:
This is one of the reasons unions are demanding a broader revision in salary calculations under the 8th Pay Commission.
The demand for DA merger is also closely linked to unions’ proposed minimum salary calculations.
According to the federation, the current minimum pay of Rs 18,000 under the 7th Pay Commission was based on older assumptions and a three-family-unit model.
The federation has proposed revising the family-unit structure to five units and recalculating minimum pay accordingly.
Under its suggested formula:
The federation then proposed adding the existing 58% DA to this revised amount, taking the figure to around Rs 47,400.
After factoring in higher nutrition and consumption expenses, the employee body argued that the “scientifically derived minimum pay” should be between Rs 55,000 and Rs 60,000.
because it could significantly influence future salary structures under the 8th Pay Commission.
If DA gets merged into revised basic pay, it could eventually affect:
The financial impact could extend beyond central government employees because many state governments often revise their salary structures after changes made by the Centre.
Historically too, DA merger has not been an unusual demand during Pay Commission exercises. Earlier Pay Commissions have also seen DA absorbed into revised pay structures when inflation levels rose substantially.
Employee unions argue that even though DA revisions happen periodically, the actual cost of maintaining a middle-class household has changed sharply over the years.
Many families today deal with:
According to unions, DA hikes alone are not enough to fully offset these broader lifestyle and household expenses.
with employee unions and organisations before finalising its recommendations to the government.
Along with demands related to fitment factor, pension reforms and family-unit calculations, the issue of DA merger is now emerging as one of the major discussions shaping employee expectations from the commission.
For lakhs of government employees, the debate is ultimately about one question: should inflation compensation continue as a temporary allowance, or should it now become part of the permanent salary structure itself?