50% DA Merger with Basic Pay in 7th Pay Commission
The 7th Pay Commission and the Merger of 50% Dearness Allowance with Basic Pay
In the year 2024, it is anticipated that the Dearness Allowance (DA) will reach a significant milestone of 50%. This raises the question of what implications this will have for central government employees.
Based on the prevailing trends of the All India Consumer Price Index (AICPIN), it is highly likely that the percentage of Dearness Allowance will surpass the 50% threshold in the upcoming installment, due from January 2024.
However, it is important to clarify that once the DA exceeds 50%, it will not automatically merge with the basic pay, contrary to certain reports circulating. The Seventh Pay Commission did not propose such a merger. In fact, it was in 2004 when the Central Government implemented the merger of 50% of the dearness allowance with the basic pay, following the recommendation of the Fifth Central Pay Commission. This had a significant impact on both employees and pensioners.
Nevertheless, the Sixth Pay Commission did not advocate for a similar merger. Instead, it introduced the concept of delinking pay revisions from a fixed 10-year cycle and tied them to the point at which DA/DR (Dearness Allowance/Dearness Relief) crosses the 50% threshold. This approach has been consistently upheld by the last three Central Pay Commissions, emphasizing that future pay revisions should occur when the DA/DR reaches or exceeds 50% of the basic pay. This serves as a measure to mitigate the adverse effects of inflation.
While the impending increase in DA may provide some relief, it is important to note that there will be a marginal increase in the Housing Rent Allowance (HRA) component. In its recommendations, the Seventh Central Pay Commission proposed a gradual increase in HRA rates to 27%, 18%, and 9% when DA crosses 50%, and further to 30%, 20%, and 10% when DA surpasses 100%. To address the current inflationary trends, the government has decided to revise these rates upwards at the 25% and 50% DA thresholds, respectively. Consequently, starting from January 2024, the HRA rates will be set at 30%, 20%, and 10% for individuals residing in X, Y, and Z type cities, respectively.
In light of these developments, employee unions have intensified their demands for the establishment of an Eighth Pay Commission. With elections on the horizon and mounting pressure on the government to implement popular measures, it is highly likely that a favorable response to this demand will materialize in the near future.
As central government employees brace themselves for the forthcoming increase in DA, all eyes remain fixed on the evolving economic landscape. Inflation continues to exert significant pressure on the household budgets of millions across the nation.
50% DA Merger with Basic Pay Order PDF Download
Download the PDF Order for the merger of 50% Dearness Allowance (DA) with Basic Pay. The topic of merging DA with Basic Pay has been a subject of extensive deliberation. This document presents a comprehensive analysis of the benefits and drawbacks associated with merging DA with Basic Pay, ultimately concluding that its implementation would be advantageous. Furthermore, a PDF version of the order for the merger of 50% DA with Basic Pay can be accessed for download.
Advantages of Merging DA with Basic Pay
Benefits of Consolidating DA with Basic Pay
There are several advantages to merging DA (Dearness Allowance) with Basic Pay. One primary benefit is the provision of a more consistent income for employees. Currently, DA is subject to fluctuations based on inflation, resulting in employees having to make adjustments to their budgeting periodically. By merging DA with Basic Pay, employees would experience greater stability in their earnings, allowing them to plan and manage their finances more effectively.
Additionally, merging DA with Basic Pay would alleviate the administrative burdens placed on employers. Currently, employers are required to track and manage both DA and Basic Pay separately, which can be a time-consuming and costly process. However, by combining these two components, the complexities associated with payroll processing would be significantly reduced. Employers would only need to monitor a single figure, simplifying their record-keeping and streamlining their operations.
To illustrate the implementation of this merger, on January 1st, 2004, 50% of the Dearness Allowance was integrated with the Basic Pay. The remaining 11% was issued as the standard dearness allowance. Consequently, the Basic Pay of an employee was revised accordingly after the merger of 50% DA on January 1st, 2004.
|Basic Pay||Rs. 4000|
|Dearness allowance 61%||Rs. 2440|
|Basic Pay||Rs. 4000|
|Dearness Pay||Rs. 2000|
|Remaining percentage of Dearness allowance 11%||Rs. 660|
DA Merger is Essential to Govt Employees?
Although the merger of 50% of Dearness Allowance (DA) is often perceived as universally beneficial, it is important to note that this perception may not be entirely accurate. While it is indeed essential for Central Government employees, it is equally important to ensure a regular increase in basic pay for other employees as well. To illustrate this, let’s consider the case of an employee with a basic pay of Rs. 10,000 as of January 1st, 2011. After merging 50% of the dearness allowance, the resulting calculation shows a minor difference of only Rs. 50 per month. It is worth noting that the 50% of DA will not be merged with the basic pay; instead, it will be designated as ‘Dearness Pay.’ This additional amount will only be payable up until the implementation date of the 7th Pay Commission.
|Basic Pay||Rs. 10,000|
|Dearness allowance 51%||Rs. 5100|
|Basic Pay||Rs. 10000|
|Dearness Pay||Rs. 5000|
|Remaining percentage of DA 1%||Rs. 150|
What is Dearness Pay?
Dearness Pay, also known as cost of living allowance, is a temporary salary increase that differs from Dearness Allowance. While Dearness Allowance is a regular increment in pay to offset rising living expenses, Dearness Pay is a temporary boost that is granted for a specific period. Typically, this type of pay raise is given to employees in industries where the cost of living exceeds the average, aiming to alleviate their financial burden. It is important to note that Dearness Pay is not a permanent addition to an employee’s salary and is only applicable for a limited duration.
Dearness Allowance as Dearness Pay
Please note that 50% of the Dearness Allowance will not be merged with the basic pay. Instead, this amount will be referred to as ‘Dearness Pay’. It will only be applicable until the implementation date of the 7th Pay Commission. This increase in pay is an advance for all employees before the official implementation. When determining the pay fixation based on the recommendations of the 7th Pay Commission on January 1, 2016, the ‘basic pay’ will be calculated without including the dearness pay.
For instance, as of January 1, 2016, the basic pay for the mentioned employee will be approximately $12,250. This amount will be considered as the basic pay for the calculation of pay fixation against the amount of $18,375. The additional amount will be provided to us as ‘Interim Relief’ during the period between the announcement and implementation. It should be noted that this amount is not merged with the ‘Basic Pay’. Some questions may arise regarding an increase in House Rent Allowance (HRA) and other entitlements.
The rate of HRA provided varies according to different cities, such as 10%, 20%, and 30%. However, it is important to note that not all employees receive a 30% HRA. Additionally, those employees who reside in Government Quarters are not eligible for the percentage hike in HRA. In major metropolitan areas, many employees reside in Government Accommodation and thus are required to pay higher HRA to the Government. Therefore, they are not affected by the increase in HRA.
Transport Allowance is provided based on the employee’s grade pay and city classification, with amounts ranging from $400 to $3,200 plus DA (Dearness Allowance). The DA amount may decrease when 50% of DA is merged with the basic pay.
In conclusion, it is evident that the hike in basic pay is the most advantageous aspect of the Dearness Allowance merger. Unlike the 6th Pay Commission, there is no recommendation to convert dearness allowance into dearness pay each time the Consumer Price Index increases by 50% over the base index mentioned in the pay commission report.
All federations representing Central Government employees are making significant efforts to fulfill the demand for the “Merger of 50% Dearness Allowance with Basic Pay”. Sources from these federations have indicated that an announcement may be made before March.
Also read: 7th Pay Commission Pay Scale Calculator
Merger of 50 percent Dearness Allowance with Basic Pay – Glance at Employees Federation…
The General Secretary of the Confederation has released a comprehensive memorandum outlining the fifteen key demands, with a particular emphasis on the pivotal issue of merging Dearness Allowance (DA) with Basic Pay. Notably, Demand No. 2 pertains to the integration of DA with pay.
The revision of wages for Central Government employees has traditionally been carried out through the establishment of Pay Commissions. This approach was deemed suitable due to the comprehensive nature of the wage revision process, which involves examining various aspects of wage determination and service conditions for Government employees.
However, the establishment of Pay Commissions has proven to be a time-consuming process. The 3rd, 4th, and 5th Central Pay Commissions took over three years to submit their reports. In contrast, the 6th Central Pay Commission managed to submit its report within the given timeframe of 18 months.
Given that previous Commissions have already covered many aspects of wage determination principles and with the reduced frequency of revision, it is possible that the current exercise may not require as much time as before. Nonetheless, it is important to provide the Commission with a reasonable timeframe to thoroughly investigate the matter, particularly since the implementation of the 6th Central Pay Commission’s recommendations has given rise to numerous anomalies and grievances related to cadre.
Historically, the method used to compensate for the erosion in the real value of wages during interim periods has been the merger of a portion of Dearness Allowance (DA). The 5th Central Pay Commission recommended merging DA with pay and treating it as pay for all allowance calculations once the Dearness compensation exceeded 50%.
Therefore, even before the establishment of the 6th Central Pay Commission, 50% of the DA had already been merged with pay. It is worth noting that this benefit was not extended to the GDS. As of January 1, 2019, the Dearness compensation stood at 65%.
The proposal to merge DA as a means of partially compensating for wage erosion was initially put forward by the Gadgil Committee after the 2nd Pay Commission. The 3rd Central Pay Commission recommended such a merger when the Cost of Living index surpassed 272 points, which was 72 points above the base index adopted for the pay revision. In other words, the 3rd Central Pay Commission recommended merging DA once it exceeded 36%.
During negotiations in the National Council JCM, the Government initially agreed to merge 60% of DA and later the entire DA before the 4th Central Pay Commission was established. Ultimately, the 5th Central Pay Commission merged 98% of DA with pay. Therefore, it is imperative for the Government to take immediate steps to merge at least 50% of DA with pay in order to address the erosion of real wages.
The All India Railwaymen’s Federation (AIRF) is advocating for the merger of 100% of Dearness Allowance with Basic Pay, while the National Federation of Indian Railwaymen (NFIR) is calling for the merger of 50% of DA with Pay and the provision of interim relief.
50% DA Merger – A Sad End to A Demand…!
The demand for the merger of 50% Dearness Allowance (DA) has reached an unfortunate conclusion. This demand originated when the DA exceeded 50% on January 1, 2011, after gradually reaching this threshold over a period of five years in ten installments, starting from zero in 2006. Since the DA crossed the 50% mark, the call for its merger has been consistently raised in parliament and included in the Charter of Demands by all federations. Employees anxiously awaited the outcome, as the merger would have provided them with significant financial benefits. Unions and federations exerted pressure on the Government through protests and strike notices. While no official announcements were made, the federation leadership claimed that the Government had implicitly consented to the demand. Newspapers were prepared to declare a 30% increase in basic pay for Central Government employees. Unfortunately, this demand has now met a regrettable end.
The demand for merging 50% DA has come to a disappointing conclusion. During the final Cabinet meeting of the previous government, there was great anticipation and excitement surrounding this issue. On February 28, 2014, an announcement was made regarding a 10% increase in DA. However, news channels, eager to be the first to report, mistakenly displayed a headline suggesting that the Government had agreed to merge 50% DA with basic pay. After 30 minutes, the channels realized their error and corrected the headline to reflect the actual 10% increase in DA. Regrettably, this caused confusion and disappointment among Central Government employees who had raised their hopes for the merger. The news turned out to be false, leading to dashed hopes for all employees.
No DA Merger in 6th CPC and 7th CPC
There has been no inclusion of DA Merger for Central Government employees in the recommendations provided by the 6th and 7th Central Pay Commission. Hence, the possibility of a DA Merger following the implementation of the 7th pay commission is eliminated.
Top Developments on Basic plus DA Merger News
|Will the 7th Pay Commission present an Interim Report to the Centre? – Reported on 18.12.2014|
|Eyes of all look expectantly on the demand of DA Merger and Interim Relief – Reported on 18.12.2014|
|Whether 7th Pay Commission proposes to submit Interim Report? – Reported on 24.11.2014|
|National Convention of the NC (JCM Staff Side) for DA Merger and Interim Relief – Reported on 28.10.2014|
|Is Interim Relief Likely for Central Government Employees? – Reported on 10.10.2014|
|CG Employees Launch Countrywide Stir Demanding 7th Pay Commission Interim Relief – Reported on 22.09.2014|
|NO MERGER OF DA – FINANCE MINISTRY REPLY TO NATIONAL COUNCIL SECRETARY – Reported on 03.07.2014|
|Demand for 50% DA Merger presented to the new government – Reported on 16.06.2014|
DA Merger in Railways
Latest Updates on DA Merger:
- Merger of 50% DA/ DR with Basic Pay/ pension, effectively amounting to 78.2% DA/ DR for the purpose of fitment – BSNL Orders issued April 3, 2023
- Merger of DA with the Basic Pay from April 2004 to Running Staff – NFIR Letter Dated 30.3.2021 April 2, 2021
- Merger of Dearness Allowance equal to 50% of basic pay from April 2004 for Running Staff – Railway Board March 10, 2017
- Merger of Dearness Allowance with the Basic Pay – Computation of emoluments of Running Staff for granting retirement benefits October 20, 2016
- Dorai focus on two crucial issues of 50% DA Merger and 3% Increment April 25, 2016
- 6th Pay Commission Dearness Allowance ends with 6% hike at 125% March 25, 2016
- Merge DA with Basic this year and Defer Increments: Pay Panel Member February 15, 2016
- 50% DA Merger and Retirement age 58 : Rumor Spreading in Social Networks September 23, 2015
- Seeking Merger of DA and Oppose reduce the Retirement age – DPCC August 25, 2015
- Denial of interim relief and the benefit of merger of DA with Pay must be viewed very seriously – NC JCM June 22, 2015
- DA to CPSE Employees from Jan 15 – 273% and 223% without and with 50% DA Merger May 14, 2015
- Order for Merger of 50% DA, Retirement age news goes viral in Social Media May 5, 2015
- NC JCM writes to PM regarding the pending demands of Central Govt Employees – DA Merger, NPS, Interim Relief, Promotion and Bonus issues May 1, 2015
- Pensioners seek 50% da merger and Bus travel concession April 16, 2015
- Meeting with 7th Pay Commission and DoPT on 25.2.2015 – Confederation publishes brief resume of the discussions February 27, 2015
- JCM Staff Side Meeting with 7th Pay Commission – Discussion about DA Merger and Interim Relief February 25, 2015
- NFIR – 55 Point Charter of Demands Including DA Merger, Interim Relief and Scrap NPS February 24, 2015
- Meeting between JCM Staff Side & 7th Pay Commission – Discussion on DA Merger & Interim Relief – NFIR February 19, 2015
- Decisions taken National Joint Council of Action meeting held on 16.02.2015 on 7th CPC, DA Merger issues February 17, 2015
- NMC urges FM to raise IT exemption limit to Rs 5 lakh, exclude DA from IT calculation, Merge DA in Basic Pay & Pension etc. February 16, 2015
- Central Govt refused Interim Relief and DA Merger – Assured for 7th CPC Report on time January 29, 2015
- Central Trade Unions submits Joint Memorandum including DA Merger and 5 Lakh IT Exemption to Finance Minister January 21, 2015
- Staff Side NC JCM writes to Cabinet Secretary for Interim Relief, Merger of DA January 13, 2015
- Will the 7th Pay Commission present an Interim Report to the Centre? December 18, 2014
- National Council Staff Side JCM meets today (11.12.2014) – Eyes of all look expectantly on the demand of DA Merger and Interim Relief December 11, 2014
- NDA AND UP TWO SIDES OF SAME COIN – EDITORIAL POSTAL CRUSADER DECEMBER-2014 December 1, 2014
- Whether 7th Pay Commission proposes to submit Interim Report? November 24, 2014
- DA Merger & Interim Relief – National Convention of NC JCM Meeting on 11.12.2014 – INDWF Circular November 23, 2014
- Government of India is reluctant to consider Merger of DA, Interim relief, scrapping of New Pension Scheme November 19, 2014
- CONFEDERATION MASS SQUATTING ON 18TH NOVEMBER 2014 – PRESS MEET BY TAMILNADU CONFEDERATION November 19, 2014
- DA MERGER – INTERIM RELIEF – DATE OF EFFECT OF 7TH CPC RECOMMENDATIONS FROM 01.01.2014 November 18, 2014
- JCM NATIONAL COUNCIL STAFF SIDE – ALL INDIA CONVENTION ON 11.12.2014 November 1, 2014
- JCM STAFF SIDE UNITY SHOULD BE FOR STRUGGLE October 31, 2014
- National Convention of the NC (JCM Staff Side) for DA Merger and Interim Relief October 28, 2014
- Central Government Employees Federations to observe Protest Day on 5th December October 27, 2014
- National Convention will adopt a joint resolution on DA Merger, Interim Relief October 22, 2014
- National Council JCM Staff Side Meeting Will Be Held Tomorrow October 11, 2014
- Is Interim Relief Likely for Central Government Employees? October 10, 2014
- Demands for DA Merger & Interim Relief strengthen Once again…NC JCM Staff Side emergency meeting on October 12 October 6, 2014
- Urgent meeting of the Staff Side of JCM (National Council) on 12.10.2014 October 5, 2014
- CONFEDERATION DECLARES NEXT PROGRAMME OF ACTION October 2, 2014
- CG Employees Launch Countrywide Stir Demanding 7th Pay Commission Interim Relief September 22, 2014
- DA from July 2014 – Cabinet may declare 7% in this month for CG Staff September 1, 2014
- Negation of the promises – Granting Interim Relief-Merger of DA, LTC by Air and Exemption of Income Tax August 28, 2014
- BRMS demands to merge 50% DA and Grant Rs.7000 as Interim Relief August 16, 2014
- Memorandum of Interim Relief and merger of Dearness allowance–Confederation News July 27, 2014
- NO MERGER OF DA – FINANCE MINISTRY REPLY TO NATIONAL COUNCIL SECRETARY July 3, 2014
- PENDING DEMANDS OF CG EMPLOYEES AND NEW GOVERNMENT – CONFEDERATION NEWS June 18, 2014
- Demand for 50% DA Merger presented to the new government June 16, 2014
- Feedback of meeting with Cabinet Secretary–Regarding of DA Merger & Interim Relief June 14, 2014
- 50% DA MERGER : Merger of DA with Pay and sanction of Interim Relief for the Central Government Employees June 14, 2014
- 50% Merger of Dearness Allowance with Pay–NFIR Writes to New FM on 28.5.2014 May 30, 2014
- AIRF demanded to the 7th Pay Commission including Merger of DA and Interim Relief May 29, 2014
- Central employees awaiting next govt nod on DA merger March 19, 2014
- NMC pleads with seventh CPC for merger of 50% DA March 12, 2014
- Expectations for 50% DA Merger and Retirement age turn into disappointments March 7, 2014
- Can the govt servants get 30% Salary hike on account of 50% DA Merger? – An analysis March 7, 2014
- 50% DA Merger and Retirement Age 62 – High hopes fading due to announcement of election dates… March 5, 2014
- CONFEDERATION CALLS FOR PROTEST AGAINST THE ARBITRARY AND UNILATERAL DECISION OF THE GOVERNMENT March 2, 2014
- 7th Pay Commission can suggest the Merger of DA in its interim report… March 1, 2014
- Whether 50% DA Merger will be approved or not..? March 1, 2014
- 50% Merger of DA and Retirement Age 62 – No discussion in the Cabinet Meeting March 1, 2014
- Cabinet Approves Merger of DA with Basic Pay February 28, 2014
- CABINET APPROVED 10% DA HIKE FOR CENTRAL GOVERNMENT EMPLOYEES AND PENSIONERS February 28, 2014
- Merger of D.A., 7th CPC ToR and Raising Retirement age 62–Cabinet will decide today..! February 28, 2014
- Impact of Merger of 50% DA in Basic Pay February 27, 2014
- Retirement Age 62 and 10% DA from Jan 2014 – Cabinet expected to clear on Friday (28.202014) February 26, 2014
- 50% DA Merger, Retirement Age 62 and Interim Relief – Cabinet is likely to clear some of these demands..! February 24, 2014
- 50% DA MERGER – Impact of merger of 50% DA with basic pay February 24, 2014
- Central Government employees may get 50% DA merger – BSNL Employees Union February 24, 2014
- Central Government employees may get 50% DA merger February 23, 2014
- Central Govt to pay the Dearness allowance for state government employees February 23, 2014
- Merger of 100% DA w.e.f. 1.1.2014 and Merger of 50% DA w.e.f. 1.1.2011 February 21, 2014
- AIRF Demanding Merger of 100% Dearness Allowance with Basic Pay February 21, 2014
- Merger of 50% DA with Pay and grant of Interim Relief – NFIR February 21, 2014
- Inclusion of DA Merger and Interim Relief in 7th CPC ToR – Cabinet likely to approve 7th CPC ToR February 20, 2014
- 50% DA MERGE OR INTERIM RELIEF FOR CENTRAL GOVERNMENT EMPLOYEES February 17, 2014
- Latest 50% DA Merger News February 4, 2014
- Merger of Dearness Allowance with Pay January 30, 2014
- Merger of 50% DA will soon be considered by Central Government Before the Budget Session… January 17, 2014
- Retirement Age 62, Merger of DA, Scrapping of NPS, inclusion of federation leaders in 7th CPC etc. – Memorandum submitted to PM January 8, 2014
- Merger of Dearness Allowance with the Pay of the Central Government Employees – reg. November 13, 2013
What is a DA Merger with Basic Pay?
Calculation of Dearness Pay and Dearness Pension for Central Govt employees and Pensioners.
What is a 50% DA Merger with Basic Pay?
As per the recommendation of the 5th Central Pay Commission, the DA should be converted into Dearness Pay each time the CPI increases by 50 percent over the base index used by the last Pay Commission.
When did the 50% DA merge with basic pay?
The Central Govt accepted the 5th CPC recommendation and decided to merge 50% DA with basic pay with effect from 1.4.2004.
What is Dearness Pay?
The Dearness Pay is a separate salary element to calculate allowances and retirement benefits.