The 8th Pay Commission’s discussions with the employee and pensioner bodies and other stakeholders in Puducherry began today (Wednesday, September 9, 2026). The pay commission has just concluded similar meetings in Chennai and the next round of discussions will be held in Chandigarh from September 16-18, 2026. In several discussions and in the memo submitted by the employee and pensioner groups to the 8th Pay Commission, a key demand is the merger of dearness allowance (DA) with basic pay.
Why do employee and pensioner bodies want the merger of DA with basic pay?
Leading central government employee organisations such as the National Council – Joint Consultative Machinery (NC-JCM), the All India Defence Employees’ Federation (AIDEF) and the All India New Pension Scheme Employees’ Federation (AINPSEF) among others, have recommended the merger of DA with basic pay once DA crosses 25%.
Under the current system, the Finance Ministry increases the DA of all central government employees twice a year- in January and June. However, it doesn’t merge DA with employees’ basic pay at any stage.
The AINPSEF says that the merger of DA with basic pay will help increase the salary at a quicker pace, and employees won’t have to wait for 10 years for a decent salary hike.
The AINPSEF says that the merger will mainly help employees working at low levels, who get low salaries and live in big cities where expenses are high.
DA merger recommendations for 8 th Pay Commission
| Organisation | Proposed Annual Increment | Proposed DA |
| National Council of the Joint Consultative Machinery (NC-JCM) | 6% | All allowances to be increased by three times and to be linked with DA increase |
| National Federation of Postal Employees (NFPE) | 6% | At 25%, DA should be merged with basic pay |
| All India New Pension Scheme Employees Federation (AINPSEF) | 7% | At 25%, DA should be merged with basic pay |
| Indian Railways' Supervisors' Association (IRTSA) | 5% | At 50%, DA should be merged with basic pay |
| Pragatisheel Shikshak Nyaya Manch (PSNM) | 7% | At 50%, DA should be merged with basic pay |
| All India Defence Employees' Federation (AIDEF) | 6% | All allowances to be increased by three times and to be linked with DA increase |
How DA merger with basic pay can work in practice
The NC-JCM, in its memorandum submitted to the 8th Pay Commission, says that when DA crosses the 25% limit, it should be merged with basic pay. Now let’s see how it may play out in practice.
Take the example of a Level 1 employee earning a basic pay of Rs 18,000. Assuming that the 8th Pay Commission’s fitment factor is 2.1, their revised salary could be Rs 37,800 as of January 1, 2026. If the employee gets a 4% average DA hike every year and the annual increment rate increases from 3% to 7%, their estimated gross salary (basic pay+DA) as of January 1, 2033, would be around Rs 77,694, a 106% increase from the revised basic pay of Rs 37,800.
The DA rate at that time would be approximately 28%. If the DA is merged at that stage, the employee’s basic salary will be approximately. This means that in seven years, the basic salary will double.
| Basic pay | ₹ 18,000 |
| Revised basic pay at 2.1 fitment factor | ₹ 37,800 |
| Annual increment rate | 7% |
| Annual DA hike | 4% |
| Date | Basic Pay (₹) | DA Rate | DA Amount (₹) | Gross Salary (₹) | Gross Salary increase |
| 01-Jan-26 | 37800 | 0% | 0 | 37800 | |
| 01-Jan-27 | 40446 | 4% | 1618 | 42064 | 11% |
| 01-Jan-28 | 43277 | 8% | 3462 | 46739 | 24% |
| 01-Jan-29 | 46307 | 12% | 5557 | 51863 | 37% |
| 01-Jan-30 | 49548 | 16% | 7928 | 57476 | 52% |
| 01-Jan-31 | 53016 | 20% | 10603 | 63620 | 68% |
| 01-Jan-32 | 56728 | 24% | 13615 | 70342 | 86% |
| 01-Jan-33 | 60699 | 28% | 16996 | 77694 | 106% |
How basic pay of Level 6 employee may double in 7 years after DA merger
Now take the example of a Level 6 central government employee earning a basic pay of Rs 37,800 under the 7th Pay Commission. We will see how their salary is expected to progress over 7 years into the 8th Pay Commission.
| Basic pay | ₹ 35,400 |
| Revised basic pay at 2.1 fitment factor | ₹ 74,340 |
| Annual increment rate | 7% |
| Annual DA hike | 4% |
| Date | Basic Pay (₹) | DA Rate | DA Amount (₹) | Gross Salary (₹) | Gross Salary increase |
| 01-Jan-26 | 74340 | 0% | 0 | 74340 | |
| 01-Jan-27 | 79544 | 4% | 3182 | 82726 | 11% |
| 01-Jan-28 | 85112 | 8% | 6809 | 91921 | 24% |
| 01-Jan-29 | 91070 | 12% | 10928 | 101998 | 37% |
| 01-Jan-30 | 97445 | 16% | 15591 | 113036 | 52% |
| 01-Jan-31 | 104266 | 20% | 20853 | 125119 | 68% |
| 01-Jan-32 | 111564 | 24% | 26775 | 138340 | 86% |
| 01-Jan-33 | 119374 | 28% | 33425 | 152798 | 106% |
Here also, you can see that at an average 4% annual DA increase, an annual increment rate of 7% and a fitment factor of 2.1, a Level 6 employee’s estimated basic pay after the DA merger on January 1, 2033, will be Rs 1,52,798, which is more than two times of Rs 74,340.
However, these are estimates, and the real basic and gross salary increases will be known only after the government approves the 8th Pay Commission report.
