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, especially about dearness allowance (DA) and dearness relief (DR). There are concerns that once the 8th Pay Commission kicks in, both DA and DR might drop to zero.
Back during the 5th Pay Commission, there was a unique rule that allowed DA and DR to exceed 50% and automatically get added to the basic salary or pension. This was meant 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 both the 6th and 7th Central Pay Commissions, DA wasn’t merged into the basic salary. Instead, when the new Pay Commission’s recommendations were put into action, salaries were determined based on a fitment factor, meaning DA wasn’t included right away. It gets added later, depending on the Pay Commission’s suggestions.
Considering the ongoing rise in inflation, the central government updates the dearness allowance for employees and pensioners every six months. This adjustment is reflected in their salaries starting in January and July. The next DA hike is expected to be announced in March 2025.
Then will DA become ‘0’ from 50%?
This dearness allowance is decided on the basis of basic salary or pension. Dearness allowance is a major part of the salary of central employees. There is no such provision in the current pay commission that if DA is more than 50%, it will be automatically included in the basic salary and it will be made ‘0’. Similarly, it is also about dearness relief.
The fitment factor is a key element used to determine the salaries of government employees and the pensions of retirees. It is established based on the recommendations of a commission. For instance, if an individual’s basic salary is 20,000 and the 8th Pay Commission recommends a fitment factor of 2.5, the new basic salary would rise to 50,000. The same principle applies to the calculation of pensions.