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No Automatic Merger of Dearness Allowance (DA) and Dearness Relief (DR) Despite Reaching 50% Mark

Government Clarifies: No Automatic Merger of Dearness Allowance (DA) and Dearness Relief (DR) Despite Reaching 50% Mark


In a recent clarification by a senior official from the Finance Ministry, it has been confirmed that the Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners will not be automatically merged into their basic pay, even after reaching the 50% mark. This announcement comes as a disappointment for the 49.18 lakh central government employees and 67.95 lakh pensioners who were expecting a different outcome.


The Union Cabinet had approved a 4% hike in DA for Central Government employees and DR for Central Government pensioners, effective from January 1. With this increase, the DA and DR have reached the 50% mark. Many had speculated whether the DA/DR would be merged with the basic pay, as had been the practice previously.


However, the clarification provided by a senior Finance Ministry official dismissed these speculations. The official pointed out that while in the past, there used to be an automatic merger of DA with basic pay, this is no longer the case. Referring to the recommendations of previous Pay Commissions, it was explained that the 5th Pay Commission had recommended converting DA into Dearness Pay whenever the Consumer Price Index increased by 50% over the base index used by the last Pay Commission. Consequently, the government had issued orders in February 2004 for merging 50% of the DA with the basic pay, effective from January 1, 2004.


However, the 6th Central Pay Commission recommended against merging DA with basic pay at any stage, a recommendation which the government accepted. The same stance was maintained by the 7th Pay Commission, which did not propose any automatic merger of DA with basic pay.


This clarification implies that the next installment of DA/DR will not revert to ‘Zero’ but will continue to increase beyond the 50% mark, potentially reaching figures like 52%, 53%, or 54%.


This decision, while disappointing for many employees and pensioners, underscores the government's approach towards managing allowances and benefits in line with the recommendations of successive Pay Commissions. As the economic landscape evolves, such decisions are subject to periodic review, ensuring a balanced approach to compensation for government employees and pensioners.

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