8th Pay Commission: As the central government employees await the implementation of the 8th Pay Commission, the Finance Ministry recently clarified whether dearness allowance or dearness relief (DA/DR) will be merged with basic pay under the new commission.
Earlier this year, Union Minister Ashwini Vaishnaw announced that the Centre had approved the implementation of the 8th Pay Commission, which is expected to revise the allowances, pensions, and salaries of central government employees. In October, the Cabinet approved the terms of reference (ToR) for the 8th Pay Commission.
Last week, the Finance Ministry shared a major update on the 8th Pay Commission, noting that the government does not plan to merge basic pay with DA/DR.
What did Finance Ministry say?
Pankaj Chaudhary, minister of state in the Ministry of Finance, told the Lok Sabha in a written reply on 1 December 2025 that there has been no proposal to merge DA with basic pay. In his reply, the minister said, “No proposal regarding merger of the existing dearness allowance with the basic is under consideration with the government at present.”
The finance ministry’s reply comes after a question raised by Member of Parliament Anand Bhadauria, who highlighted that central government employees and pensioners are significantly affected by inflation, and that the DA and DR granted to employees do not align with real-time retail inflation.
“Whether the government proposes to merge the existing DA/DR with basic pay as an immediate relief measure for Central Government employees/pensioners who are facing unprecedented inflation during the last 30 years since DA/DR given to these employees is not in consonance with the real-time retail inflation,” the question read.
What is DA/DR and basic pay?
Dearness allowance is a cost-of-living adjustment included in a government employee’s salary, while dearness relief is a similar payment to pensioners. It aims to offset inflation and maintain purchasing power. The rates are usually reviewed and updated twice a year, typically around Diwali in October and Holi in March.
Basic Pay is the basic salary of an employee on which other allowances and deductions are based. Benefits such as DA and HRA (House Rent Allowance) are calculated based on the basic pay.
When was DA hiked last time?
The Cabinet approved a 3% increase in the dearness allowance for central government employees on 1 October, ahead of Diwali, impacting nearly 49.19 lakh employees and 68.72 lakh pensioners.
8th Pay Commission Terms of Reference
The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the Terms of Reference (ToR) of the 8th Central Pay Commission on 28 October, according to an official release.
ToR is a framework that defines the scope of a pay commission and specifies the areas in which it must offer recommendations.
8th Pay Commission members
The 8th Central Pay Commission will be a temporary body. The Commission will comprise three members. Justice Ranjana Prakash Desai will be the Chairperson, Pulak Ghosh will serve as a member (Part Time), while Pankaj Jain will take charge as a Member-Secretary.
8th Pay Commission deadline
The pay commission will make recommendations within 18 months of the date of its constitution. It may consider, if necessary, sending interim reports on any of the matters as and when the recommendations are finalised, according to the government notification issued on 28 October
8th Commission: Factors to look out for
The Commission will consider the following factors while making recommendations –
- The country’s economic conditions and the need for fiscal prudence.
- The need to ensure that adequate resources are available for developmental expenditure and welfare measures.
- The unfunded cost of non-contributory pension schemes.
- The likely impact of the recommendations on the finances of the state governments, which usually adopt the recommendations with some modifications.
- The prevailing emolument structure, benefits and working conditions available to employees of Central Public Sector Undertakings and the private sector.
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