The central government has given the green light for the 8th Pay Commission to be set up. This has sparked a lot of questions among people, particularly about the Dearness Allowance (DA) and Dearness Relief (DR).
There’s talk that once the 8th Pay Commission kicks in, both DA and DR might drop to 0. This stems from a rule in the 5th Pay Commission that stated if DA and DR went over 50%, they would automatically be added to the basic salary or pension. The idea was to streamline the pay structure, but that didn’t happen with the 6th and 7th Pay Commissions.
So, what was the deal with the 7th Pay Commission?
In the 6th and 7th Central Pay Commissions, DA wasn’t merged into the basic salary. Instead, salaries were based on a fitment factor when the new Pay Commission’s recommendations were put into action. So right now, DA isn’t part of that equation.
With inflation on the rise, the central government updates the dearness allowance for employees and pensioners every six months, calculating it into their salaries in January and July. The next bump in the dearness allowance is expected to be announced in March 2025. So, will the DA really drop from 50% to ‘0’? The dearness allowance is based on the basic salary or pension, and a big chunk of central employees’ pay comes from it. The current pay commission doesn’t have any rule stating that if DA goes over 50%, it will automatically be added to the basic salary and reduced to ‘0’. The same goes for dearness relief.
What’s the fitment factor all about? Let’s break it down with an example. The fitment factor is a standard used to determine the salaries of government workers and the pensions of retirees. It’s based on what a commission recommends. For instance, if someone has a basic salary of 20,000 and the 8th Pay Commission suggests a fitment factor of 2.5, their basic salary would jump to 50,000. The same goes for calculating pensions.
Now, when can we expect the 8th Pay Commission to kick in? The central government typically rolls out a new pay commission every 10 years to adjust employee salaries. The 7th Pay Commission came into play in 2016, while the 6th was introduced in 2006. The 4th and 5th Pay Commissions followed the same 10-year pattern. The government has asked the 8th Pay Commission to have its report ready by 2026, so it’s likely we’ll see it implemented around that time too.