In the year 2004, 50 percent of dearness allowance was merged with basic pay for Central Government Employees and Pensioners with effect from 1.4.2004. This was implemented as per the recommendation of the 5th Central Pay Commission and the Union Cabinet Committee approved to merge 50% of dearness allowance with basic pay and issued orders on 1.3.2004.
The issue of merging Dearness Allowance (DA) with Basic Pay has been a topic of debate for many years. This essay will discuss the pros and cons of merging DA with Basic Pay, and will ultimately conclude that the merger should be implemented.
One of the main advantages of merging DA with Basic Pay is that it would provide employees with a more stable income. Currently, DA is subject to change depending on inflation, which can lead to employees having to adjust their budgeting accordingly. By merging DA with Basic Pay, employees would be able to plan their finances more effectively as their income would remain consistent.
Another advantage of merging DA with Basic Pay is that it would reduce the administrative burden on employers. Currently, employers have to keep track of both DA and Basic Pay separately, which can be time consuming and costly. By merging the two, employers would only have to keep track of one figure, which would make payroll processing much simpler.
The DA was 61% at that time. (61% – 50% = 11%) 50% of dearness allowance was merged with basic pay and the remaining 11% was issued as normal dearness allowance with effect from 1.1.2004.
Example: An employee’s Basic Pay had revised as under on 1.1.2004 after 50 % DA merged with basic pay…
|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|
Check with 50 DA Merger calculator
Everybody thinks that the merger of 50% DA is more beneficial…. But it is not like that…….!
It is essential to CG Employees, of course for others also, a regular increase in the basic pay is needed………!
For Example, an employee’s basic pay Rs.10000 as on 1.1.2011, after merging of 50% dearness allowance the calculation clearly shows the difference only 50 rupees per month.
|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|
“Note that the 50% of Dearness allowance will not be merged with basic pay, instead, the amount will be shown as ‘Dearness Pay’. This amount will be payable only up to the date of implementation of the 7th pay Commission.
This is only an advance hike for all employees before the implementation of the 7th CPC.
When fixation of pay on the recommendations of 7th CPC on 1.1.2016 according to the revised pay rules, the amount of ‘basic pay’ will be taken without dearness pay.
For example, approximately the basic pay of the above employee will be 12,250 as on 1.1.2016. This amount only will be taken as Basic Pay for the calculation of pay fixation against the amount of 18,375.
The enhanced amount will be given for us as ‘Interim Relief’ for the period between announcement and implementation…It is not at all merged with ‘Basic Pay’..!
We can hear, what about a hike in HRA and other entitlements.
The rate of HRA is provided according to the cities, like 10, 20 and 30%. Not all employees are getting 30%. And one more important point is the percentage hike in HRA will not apply to those who are living in Government Quarters. In major metropolitan cities, thousands of employees are residing with Government Accommodation. They will pay more as HRA to Government and they don’t bother about increasing in HRA.
Transport Allowance is providing according to their GP and classified cites, the amount varies from 400 to 3200 plus DA thereon. The DA amount may decrease when 50% of DA merged with basic pay.
So, ultimately hike in Basic pay only the factor is more beneficial in DA Merger.
But in 6th CPC there was no recommendation to convert dearness allowance as dearness pay each time the CPI increase by 50% over the base index recommended in the pay commission report.
All Central Government employees federations are showing a maximum effort to achieve the demand of “Merger of 50% Dearness Allowance with Basic Pay” at this time.
Federations sources said, there will be a chance to announce before March…!
Also read: 7th Pay Commission Pay Scale Calculator
Confederation General Secretary publishes the detailed note on the fifteen points demands, including the main point of ‘Merger of DA with Basic Pay’.
Item No. 2. Merger of DA with pay
The wage revision of the Central Government employees had always been through the setting up of Pay Commissions. Since the wage revision exercise involves inquiring into various aspects of wage determination and service conditions of the Government employees the Government had been appointing Pay Commissions for it was considered a better suited system.
Such inquiry through setting up of Commissions had been a time consuming process. The 3rd, 4th and 5th Central Pay Commissions had taken more than three years to submit their reports.
The 6th CPC however, submitted its report in the time frame provided to it i.e. 18 months.
Since the earlier Commissions had covered many aspects of the principles of wage determination and the periodicity of such revision had come down, the exercise might not now require a longer period of time as was the case earlier Even then the Commission will have to be given a reasonable time frame to go into the matter judiciously for the 6th CPC recommendations when implemented has given rise to large number of anomalies and cadre reated grievances.
The methodology adopted for compensating the erosion in the real value of wages in the in the interregnum period had always been though the mechanism of merger of a portion of DA.
The 5th CPC had recommended that the DA must be merged with pay and treated as pay for computing all allowances as and when the percentage of Dearness compensation exceeds 50%.
Accordingly even before the setting up of the 6th CPC the DA to the extent of 50% was merged with pay.
It is pertinent to mention that even this benefit was denied to the GDS. As on 1.1.201, the Dearness compensation was 65%.
The suggestion for merger of DA to partially compensate the erosion in the real wages was first mooted by the Gadgil Committee in the post 2nd Pay Commission period.
The 3rd CPC had recommended such merger when the Cost of Living index crossed over 272 points i.e. 72 points over and above the base index adopted for the pay revision.
In other words, the recommendation of the 3rd CPC was to merge the DA when it crossed 36%.
The Government in the National Council JCM at the time of negotiation initially agreed to merge 60% DA and later the whole of the DA before the 4th CPC was set up.
The 5th CPC merged 98% of DA with pay. It is, therefore, necessary that the Government takes steps to merge atleast 50% of DA with pay to compensate the erosion of the real value of wages immediately.
AIRF Demanding Merger of 100% Dearness Allowance with Basic Pay
Merger of 50% DA with Pay and grant of Interim Relief – NFIR
|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|
90Paisa published an interesting article about one of the major demand for CG Employees…!
On 01.01.2011, DEARNESS ALLOWANCE crossed 50%. It started from ‘0’ in 2006 and, within 5 years, i.e., in 10 instalments, it has completed 50%.
The second instalment in 2010 touched two-digits for the first time. Since the last two instalments too were of ten per cent each, the Dearness Allowance easily touched 100% in six instalments.
Ever since the DEARNESS ALLOWANCE crossed 50%, the demand for 50% DA MERGER began.
Since 2012, questions regarding this were raised in the Parliament a number of times, but the Government chose to reject all of them.
When all FEDERATIONS made this their most important demand, it was included in the CHARTER OF DEMANDS. As a result, without any distinction, all the employees are very much eager to see the outcome. They began to calculate the financial benefits that result when 50% of DEARNESS ALLOWANCE gets added to the basic salary. In addition to these, an online calculator too was launched.
All the unions and federations began exerting pressure on the Government. Protests were announced. Decisions were made to hold strikes and strike notices were issued to the Government. The CONFEDERATION created a record of sorts by conducting a 2-day long strike.
There were constant reports that Federation leaders had been raising the demands with the Government during various levels of talks. When some of the Federations issued strike notices, the Government invited them for talks and the proposed strike was withdrawn. This further strengthened hopes.
Although no official announcements were made, the federation leadership said that the Government had given implied consent to the demand. Everyone thought their mission was accomplished successfully.
All the newspapers were ready to print headlines announcing a 30% hike in basic pay for Central Government employees.
Since this was the last Cabinet meeting of this Government, there was no dearth of excitement and expectations. During the cabinet meeting that began on February 28, 2014, the Government announced a 10% hike in DA. But, in a hurry to beat the competition, leading news channels began running news scrolls that the Government had given ‘Merger of 50% DA’ with basic pay. It was only after 30 minutes that the channels realized their mistake and corrected the scrolling headline to ‘Hike in DA by 10%’.
But, by then, it had created endless confusion.
One can say that there would have been no Central Government employee who didn’t get upset that day. So high were their hopes. But, all their hopes were crushed when the news turned out to be false.
No DA Merger in 6th CPC and 7th CPC
The 6th and 7th Central Pay Commission has not given any recommendations on DA Merger for Central Government employees. So, there will be no question about DA Merger after the 7th pay commission.
DA Merger in Railways
Latest Updates on DA Merger:
- 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
- Merger of 50% DA/ DR with Basic Pay/ pension, effectively amounting to 78.2% DA/ DR for the purpose of fitment – BSNL Orders issued July 21, 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 per cent 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.
Also Check: Central Government Pay Matrix Table 2022 PDF