8th Pay Commission interim relief: Merge 50% DA with Basic Salary, FNPO tells 8th CPC chairperson

In a letter to the 8th CPC dated February 27, 2025, Sivaji Vasireddy, Secretary General, FNPO said, "In the light of the prevailing inflationary conditions and the erosion of real wages, my Federation earnestly request the Hon'ble Commission to recommend to the Government the merger of 50% Dearness Allowance with Basic Pay/Pension with effect from 01.01.2026 as a measure of interim relief. This measure would provide immediate financial relief, restore partial purchasing power, and ensure economic dignity to lakhs of employees and pensioners across the country."

The government provides DA to Central Government employees and pensioners to neutralise the impact of price rise.

Reddy said DA has increased substantially over the years due to persistent inflationary trends affecting essential commodities, housing, healthcare, education, fuel, and transportation.

"As DA is directly linked to the cost of living, its steep rise reflects the continuous erosion of real wages. The present DA has already crossed significant levels, clearly indicating that the existing basic pay structure no longer reflects the actual cost of living," he said.

The FNPO has given the following justification for its demand to merge 50% DA with Basic Pay

Sustained inflation over the past several years has substantially reduced the purchasing power of employees. Essential commodities and services have witnessed consistent price escalation, placing heavy financial stress on employees and pensioners.

Historically, whenever DA crossed 50%, it was considered appropriate to merge a portion of DA with Basic Pay to neutralise inflation impact and to provide structural correction in pay. Such merger ensures that future DA calculations are made on a realistic base.

Since several allowances and retirement benefits are calculated on Basic Pay, non-merger of DA leads to stagnation in actual financial improvement. Merger of 50% DA would:

• Enhance House Rent Allowance, Transport Allowance, and other pay-linked benefits.

• Improve pension, gratuity, and other retirement benefits.

• Provide long-term financial stability to employees and pensioners.

The constitution of the 8th CPC and the time required for submission and implementation of its recommendations may take considerable time.

During this period, employees continue to face severe inflationary pressures. Therefore, merger of 50% DA with Basic Pay may kindly be considered as an interim relief measure, subject to final adjustment based on the 8th CPC recommendations.

Reddy said that the rising cost of food and essential commodities, housing and rentals, education and healthcare, and fuel and transportation has significantly increased household expenditure. "Middle-class salaried employees are particularly affected, as their income growth does not proportionately match market inflation."

In view of the above, the FNPO has requested the 8th CPC to recommend the merger of 50% Dearness Allowance with Basic Pay for all Central Government employees and pensioners. It also said that such a merger should be treated as interim relief before the finalisation and implementation of the 8th CPC recommendations.