Dearness Allowance Demand: Employees Push for DA Merger, Higher Minimum Pay Ahead of 8th Pay Commission
Dearness Allowance demand among government employees has intensified, with unions seeking an inflation-linked wage model, DA merger with basic salary and changes in the calculation formula. The Centre’s 2% DA hike in April raised the allowance to 60% of basic pay. Employee groups have also sought higher minimum pay ahead of the 8th Pay Commission recommendations.
A large number of government employees and pensioners are seeking changes in the Dearness Allowance (DA) system, including an inflation-linked wage model, merger of DA with basic salary and a revision in the calculation formula. The demands come after the Centre increased DA by 2% in April, taking it from 58% to 60% of basic pay, effective from January 1, 2026.
The DA hike benefited around one crore central government employees and pensioners, including nearly 50 lakh employees and about 65 lakh pensioners. The allowance is revised twice a year based on inflation data from the All-India Consumer Price Index for Industrial Workers (AICPI-IW). 8th Pay Commission: Will Central Government Employees Get Old Pension Scheme? Here’s the Latest Update.
DA Demand: Employees Seek Inflation-Linked DA Model
Several employee organisations and unions have submitted demands before the 8th Pay Commission, which is currently examining recommendations related to government salaries and benefits.
The National Council–Joint Consultative Machinery (NC-JCM) has demanded that DA should be updated through an inflation-linked wage model. The council has also suggested increasing the minimum pay from the existing INR 18,000 per month to INR 69,000. 8th Pay Commission: Level 15-18 Employees May Get Monthly HRA up to INR 1.93 Lakh Under 2.57 Fitment Factor.
The All India Defence Employees Federation (AIDEF) has also sought an inflation-adjusted compensation structure and proposed a minimum pay of INR 69,000 per month.
The Maharashtra Old Pension Organisation has demanded a minimum DA hike of 4%, merger of DA at 50% and an increase in minimum pay to INR 65,000 per month.
Demand for DA Merger With Basic Salary
One of the key demands raised by employee groups is the official merger of DA with basic salary. The 7th Pay Commission had recommended that DA could be merged with basic pay once it crosses 50%. With DA currently at 60% of basic pay, employee groups have renewed their demand for a merger.
A DA merger would impact several components linked to basic salary, including provident fund contributions, pension calculations, allowances and gratuity benefits. However, the government has not announced any official decision on DA merger as of July 2026.
Employees Seek Change in DA Calculation Formula
The AIDEF has also requested changes in the formula used to calculate DA. The federation has argued that the current system gives higher weightage to certain stable expenditure categories, while lower-income employees spend a larger share of their earnings on essential expenses such as food, education, healthcare, house rent and medicines.
The organisation has suggested replacing the existing index with an employee-specific cost-of-living index that better reflects actual household expenses.
DA Hikes Announced by Centre, States and Other Bodies
Following the Centre's DA increase, several other organisations and state governments announced revisions.
The Indian Banks' Association (IBA) increased basic salaries between INR 48,000 and INR 1,17,000 and revised DA from INR 435 to INR 1,050 for workmen and officer employees across levels for May, June and July 2026.
Indian Railways also approved a 2% DA hike. Among states, West Bengal increased DA to 38% of basic salary, while Arunachal Pradesh, Assam, Odisha, Tamil Nadu and Uttar Pradesh approved 2% hikes, taking DA to 60% of basic pay.
Bihar announced different increases based on pay commission categories, including a 2% hike for employees under the 7th Pay Commission, 5% for those under the 6th CPC and 9% for employees under the 5th CPC.
Maharashtra approved payment of INR 800 crore in DA arrears under the 5th, 6th and 7th CPCs for November and December 2025 and January 2026, along with a 2% Dearness Relief hike for retired All India Services officers.
Next DA Revision Awaited
Government employees and pensioners are now awaiting the possibility of another DA revision in the second half of 2026.
Employee groups are expecting a possible 3-4% increase, but the final decision will depend on June 2026 AICPI-IW data released by the Labour Bureau and subsequent government approval. The 8th Pay Commission's recommendations are also expected to consider several of these demands submitted by employee organisations and unions.
(The above story first appeared on LatestLY on Jul 28, 2026 03:59 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).