Why the Merger Debate Began
Amid rising anticipation around the 8th Pay Commission update, discussions have intensified over whether the Central government might merge Dearness Allowance (DA) and Dearness Relief (DR) with basic pay. Employee unions have been arguing that soaring inflation over the last three decades has outpaced DA and DR revisions, making an adjustment necessary to ease financial pressure on employees and pensioners.
Government’s Official Clarification: No Merger Under Consideration
The Union Ministry of Finance has categorically stated that no proposal is being examined to merge DA or DR with basic pay.
In a written reply submitted to the Lok Sabha on December 1, 2025, Minister of State for Finance Pankaj Chaudhary clarified:
“No proposal regarding the merger of the existing dearness allowance with basic pay is under consideration at present.”
This response was given to questions raised by MP Anand Bhadauria, who highlighted that central government employees and pensioners are struggling with unprecedented inflation and believe that DA/DR increments do not reflect real-time retail price levels.
Employee Unions Renew Push for 50% DA Merger
Following the notification of the 8th Pay Commission’s Terms of Reference in early November, several employee organisations have revived their long-standing demand for merging 50% DA with basic pay.
According to analysts, such a merger would significantly impact future pay structures, as the fitment factor—which determines revised salary slabs—would be recalibrated from a higher base.
Why This Clarification Matters
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It affects salary expectations of millions of central government employees and pensioners
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Provides clarity amid widespread speculation
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Helps prevent misinformation about interim relief or pay restructuring
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Sets the tone for the upcoming stages of the 8th Pay Commission review
What to Expect Going Forward
Tax and labour policy experts believe the government will adopt a cautious approach before announcing any form of interim relief or structural changes. As the 8th Pay Commission progresses with its evaluation, more clarity on pay matrix revisions, fitment factor changes, and DA/DR policies is expected in the coming months.