The issue of increasing the salaries of government employees is once again being discussed in light of union demands regarding the Eighth Pay Commission. Unions insist on including a portion of the Dearness Allowance (DA) into the Basic Pay. Implementing this proposal could affect not only the main salary but also other related allowances and future pay hikes. Currently, the government has not yet made a decision on merging the DA.
The Eighth Pay Commission began consultations with employees and other stakeholders in Puducherry on September 9, 2026. Previous meetings were held in Chennai, and the next phase is scheduled for September 16 to 18 in Chandigarh. At these meetings, employees, pensioners, and other interested parties will present their proposals and demands to the commission.
Currently, central government employees receive a DA hike twice a year, effective in January and July. However, despite the rise in DA, it does not become part of the basic pay under the existing system. Employees argue that merging a portion of the DA with the basic pay could greatly benefit workers with low basic salaries.
According to the All India National Pensioners and Superannuates Federation (AINPSEF), decisions on demands such as DA merger and salary revision could lead to a significant increase in the total salary of employees. According to AINPSEF's forecast, the gross salary of a level-1 employee could reach approximately 77,694 rupees by January 1, 2033. This amount is about 106% higher than the projected revised basic pay of 37,800 rupees on January 1, 2026.
The demands of various unions regarding DA merger are not uniform. The National Federation of Postal Employees (NFPE) and AINPSEF have proposed merging 25% of the DA. Meanwhile, the Indian Railway Technical Supervisors Association (IRTSA) and Pensioners and Senior Citizen Association (PSNM) have proposed limiting the merger to 50% of the DA. The National Council-Joint Consultative Machinery (NC-JCM) recommended merging more than 25% of the DA into the basic pay in its memorandum.
Some organizations demanded not only the merger of DA but also a significant increase in other allowances. NC-JCM and the All India Defence Employees Federation (AIDEF) proposed tripling all allowances and linking them to the DA hike. Regarding the pay hike, there are various proposals: NFPE, NC-JCM, and AIDEF proposed 6%, AINPSEF and PSNM proposed 7%, and IRTSA proposed 5%.
Consider an example: the current starting basic pay for a level-1 employee is 18,000 rupees. Applying the 2.1 fitment factor for the Eighth Pay Commission will result in a revised basic pay of 37,800 rupees from January 1, 2026. According to AINPSEF's forecasts, the basic pay could be around 56,728 rupees by January 1, 2032, and the DA amount around 13,615 rupees. Then, by January 1, 2033, the gross salary is projected to be around 77,694 rupees. However, if the DA is merged, the exact amount of the new basic pay for a level-1 employee on January 1, 2033, is not yet known. Specific figures will only be known after the government makes a decision on the proposals for DA merger and salary revision.
Take the example of a level-6 employee, whose current starting basic pay is 35,400 rupees. Based on the 2.1 fitment factor, the revised basic pay for January 1, 2026, is estimated at 74,340 rupees. According to AINPSEF, by January 1, 2032, the basic pay could be around 111,564 rupees, and the DA amount 26,775 rupees. By January 1, 2033, the gross salary is projected to reach approximately 152,798 rupees. It is important to note that these are union estimates, not officially announced government salaries.
If a portion of the DA is merged with the basic pay, it will affect not only the salary for the current month. An increase in the basic pay may also impact some basic pay-related allowances and future salary calculations. This is why unions demand the merger of DA. Nevertheless, the final decision on this matter has not been reached. The Eighth Pay Commission is reviewing the demands of various employee and pensioner unions, after which the government will have to make a decision.