In April, the central government had increased the Dearness Allowance (DA) of central employees and pensioners by 2%. After this DA increased to 60% of the basic salary, which was earlier 58%. Under the recommendations of the 7th Pay Commission, DA is revised twice a year on the basis of All India Consumer Price Index (AICPI). Its purpose is to maintain the purchasing power of employees’ income from the impact of rising inflation.
The benefit of DA is available to central government employees, public sector undertakings (PSU) employees, defense personnel, bank employees and retired pensioners. Usually it is announced in March and October, while its benefits are implemented from January and July. Private sector employees do not get DA.
DA is part of the total pay package (CTC) of the employee and is given every month along with salary or pension. Its purpose is to compensate for the increased expenditure due to inflation. About 50 lakh central employees and more than 65 lakh pensioners, including defense personnel and retired employees, benefit from the DA increase.
5 major demands related to DA of employee organizations
Central government employee organizations, unions and pensioner representatives have put forward many important demands regarding DA. It is believed that these demands may affect the recommendations of the 8th Pay Commission. The 8th Pay Commission had started the process of submitting the memorandum from March 5, which closed on June 15.
1. Salary should be fixed according to inflation
All India Defense Employees Federation (AIDEF) has demanded that employees should be given salaries as per inflation. The organization has also proposed to increase the minimum basic salary to Rs 69,000 per month.
2. At least 4% increase in DA and merger at 50%
Maharashtra Old Pension Organization has demanded that DA should be increased by at least 4% and when DA is 50%, it should be merged with the basic salary. Besides, a demand has also been made to increase the minimum salary to Rs 65,000 per month.
3. DA should be completely linked to inflation
National Council-Joint Consultative Machinery (NC-JCM) says that DA should be calculated completely on inflation based model. The organization has also demanded to increase the minimum basic salary from the current Rs 18,000 to Rs 69,000.
4. Government should decide soon on DA merger
Many employee organizations have demanded from the Central Government to make an official announcement to merge DA with basic salary. The 7th Pay Commission had said that if DA exceeds 50%, then it can be considered for merging it with the basic pay. At present DA has reached 60%, but the government has not yet taken any official decision on this.
5. The method of calculating DA should be changed
AIDEF, in its second memorandum to the 8th Pay Commission, has demanded to change the existing formula for calculating DA. The organization says that in the current system, more importance is given to such expenses whose prices do not change much, whereas low paid employees spend a large part of their income on food, education, health, house rent, medicines and other essential expenses. Therefore, these essential expenses should be given more importance in the calculation of DA.
Why is increasing DA a big demand?
Railway Senior Citizens Welfare Society (RSCWS) says that the current DA only partially compensates the loss due to inflation. The difference between wage revision over time and ever-increasing inflation significantly affects the purchasing power of employees.
The organization also says that in the current salary structure, more emphasis is given on allowances and DA rather than basic salary. Whereas most of the pension and retirement benefits are linked to basic salary. In such a situation, low basic pay affects the long-term financial security of retired employees.
Although the Central Government has not made any official announcement to merge DA with the basic salary by June 2026, this issue is considered important because Provident Fund (PF), pension, various allowances, gratuity and other financial benefits are decided on the basis of basic salary. In such a situation, if DA is merged or basic salary increases, then the total income and other benefits of the employees may also increase.
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