The recent increase in Dearness Allowance to 53% for central government employees has sparked discussions about its potential merger with basic pay.
The revised DA, effective from July 1, 2024, has raised questions about salary structure modifications and integration possibilities.
Understanding DA Integration with Basic Pay
The concept of DA merger stems from historical precedent when during the 5th Pay Commission, DA was integrated into basic pay upon reaching the 50% threshold.
However, the current scenario differs significantly from past practices. The 6th Central Pay Commission explicitly recommended against merging Dearness Allowance with basic pay at any stage.
Current Status and Government Stance
Despite speculation, the government maintains that DA will not be combined with basic pay, even though it has exceeded the 50% threshold.
This position reflects a more flexible approach to wage structure management adopted under the 7th Pay Commission.
DA Calculation Framework
The current DA calculation follows a specific formula:
CDA Rate Calculation = [(Average of AICPI for last 12 months – 115.76)/115.76] * 100
For public sector employees, a different formula applies:
IDA Rate Calculation = [(Average of AICPI for last 3 months – 126.33)/126.33] * 100
Impact on Employee Benefits
The increased DA does not automatically trigger changes in other allowances. Any modifications to components like HRA or TA require separate government notifications.
This system ensures more controlled and deliberate adjustments to the overall compensation structure.
Future Outlook
The next DA revision is scheduled for March 2025, with effects retroactive to January 2024.
Central government employees typically receive their revised salaries with two to three months of arrears during April and October.
Frequently Asked Questions
Will DA automatically merge with basic pay after crossing 53%?
No, there is no automatic merger provision under the current pay commission recommendations.
How often is DA revised?
DA is revised twice a year, typically in March and September/October, with effects from January and July respectively.
Does DA merger affect other allowances?
No, changes to other allowances require separate government notifications and are not automatically linked to DA percentages.
What is the current DA calculation method?
DA is calculated based on the All-India Consumer Price Index using specific formulas for different employee categories.
Will there be any DA merger in 2025?
As per current government stance, there are no plans for DA merger with basic pay in the near future.