On October 16, the Modi government announced an increase in dearness allowance (DA) and dearness relief (DR) for around 1 crore central employees and pensioners.
The DA and DR were raised by 3%, bringing them from 50% to 53%.
Following this decision, there is renewed speculation about whether the DA will now be merged into the basic salary of employees, which could lead to a significant change in their pay structure.
Will the 53% DA Be Added to Basic Salary?
Previously, there were discussions that DA would be merged into the basic salary once it crossed the 50% threshold.
The 6th Pay Commission had recommended this, stating that when DA exceeds 50%, it should be included in the basic salary.
Information and Broadcasting Minister Ashwini Vaishnav has confirmed that the government is considering this issue, though no final decision has been made.
Government Approval Required for DA Merging
The Fifth and Sixth Pay Commissions both suggested merging DA with the basic salary to form a “dearness salary.”
In 2004, following these recommendations, 50% of the DA was incorporated into the basic salary to calculate retirement and other benefits.
However, this rule has not been consistently applied since then. Any merger of DA and DR with the basic salary would need formal government approval.
How This Affects Employee Salaries
With DA now at 53%, the possibility of its inclusion in the basic salary has resurfaced.
If implemented, this merger could permanently alter the salary structure of central employees, impacting the calculation of future allowances and benefits.
While no final decision has been taken, the minister’s statement indicates that the government is seriously evaluating the proposal.
