The Finance Ministry confirmed in Parliament that there is No Proposal for DA Merger with basic pay, despite employee union demands for immediate interim relief. Get the full details on the 8th Pay Commission DA Merger Latest Update and the government’s stance on cost of living adjustments for Central Government Employees.
8th Pay Commission DA Merger Latest Update
In a significant clarification delivered during the Winter Session of Parliament, the Central Government has effectively shut down immediate aspirations for a major financial relief sought by nearly one crore Central Government Employees and pensioners. The Ministry of State for Finance, Pankaj Chaudhary, confirmed in a written reply to the Lok Sabha on December 1, 2025.
This definitive statement comes just days after the official notification of the Terms of Reference (ToR) for the 8th Central Pay Commission (8th CPC), which has been formally constituted under the leadership of Justice (Retd.) Ranjana Prakash Desai. While the commission’s formation was welcomed, the subsequent denial of the long-standing demand for Dearness Allowance Merger with Basic Pay has caused palpable disappointment across various employee unions and pensioner groups.
The pressure for the 8th Pay Commission Dearness Allowance Merger Latest Update was intense because the Dearness Allowance has recently crossed a crucial threshold, currently standing at around 58% of the basic salary. Employee unions argued that a merger would provide crucial interim relief by immediately increasing the basic pay slab. Since most critical allowances—such as House Rent Allowance (HRA), Transport Allowance (TA), and retirement benefits like gratuity and pension—are calculated as a percentage of the Basic Pay, a merger would have created a significant, cascading financial boost ahead of the final pay revision.
Moreover, the merger issue is intrinsically linked to the crucial Fitment Factor under the 8th CPC. If the merger had been implemented, the multiplication factor used to calculate the revised salary would have been applied to a much higher base, resulting in a substantially sharper salary hike for all employees. By denying the merger, the government signals its reluctance to dramatically inflate the pay base, maintaining a stance of fiscal prudence.
