8th Pay Commission: As time is passing, new news is also coming out regarding the 8th Pay Commission. Now another new update has come out, which is useful for central employees and pensioners. In fact, now another big demand has been raised to reduce the burden of inflation on government employees.

Federation of National Postal Organizations (FNPO) has sent a letter to Justice Ranjana Prakash Desai, Chairperson of the 8th Pay Commission. FNPO has demanded from the government to merge 50 percent dearness allowance (DA) in the basic salary. It has suggested implementing it as ‘interim relief’ from January 1, 2026.

Rationale behind merging DA with basic pay

• FNPO, an organization formed for the employees of the Postal Department in India, says that the prices of food items have increased in the last few years. Expenditure on medical treatment has increased. The prices of petrol and diesel have also increased rapidly. This has put pressure on the pockets of employees and pensioners.
• It was told that earlier also when DA crossed the 50 percent mark, the Pay Commission had advised to merge a part of it with the basic pay to reduce the impact of inflation.
• FNPO also pointed out that since benefits like HRA (House Rent Allowance), Transport Allowance and Gratuity depend on the basic pay, merging DA will also increase these benefits. This will benefit the employees financially in the long run.
• It was also argued that it may take a long time for the final recommendations of the 8th Pay Commission to be announced and implemented. Till then this interim step is necessary to provide relief to the employees.

There will be a big change in the salary structure

If the government accepts this demand of the employees, then there will be an increase in HRA. As basic pay increases, your house rent allowance will also increase. This will prove beneficial for retiring employees because pension and gratuity will be calculated on the basis of changed basic pay, due to which the payment will be increased. With this, all other pay-linked allowances will also increase.

Suppose if your basic salary is Rs 20000 and DA is 50 percent, then you will get 10000 DA. By merging DA with basic pay, your total salary will become Rs 30,000. That means Rs 10,000 received under DA will be added to your basic salary. If basic salary increases, all other allowances will also automatically increase. Apart from HRA, PF contribution will increase, gratuity received after retirement will increase.

In future, if DA increases again by 3 or 4 percent, then it will be calculated on the new basic pay (30000) instead of the old basic pay (20000).

Also read:

8th Pay Commission: Are preparations underway to give 5 promotions to employees? Many more benefits are also expected

Dearness Allowance (DA) has been an important part of the salary for Central Government employees, but DA growth was the slowest in the 7th Pay Commission. While DA reached 74% in 5th CPC and 125% in 6th CPC, it is still around 58–60% in 7th CPC. The main reason for this was the Covid period, when DA and DR were frozen for 18 months. DA is revised twice a year and the 8th Pay Commission report is unlikely to come before mid-2027. By then there may be 2–3 more DA hikes, taking DA to around 70%. Since DA becomes zero as soon as the new Pay Commission is implemented, a lower DA can bring a more effective salary hike in the next pay structure. Experts believe that this is the reason why 8th Pay Commission can give better salary jump for employees.

According to recent reports, the Eighth Pay Commission can be applicable only in the beginning of 2026 instead of 2027. Last month, in the same connection, representatives of the National Federation (GENC) met Union Minister Jitendra Singh. Jitendra Singh confirmed that the matter is actively negotiating with the state governments, which is expected to make official announcements about the commission and its panel soon.

How much salary will increase?

Trump Tariff: Why suddenly Trump rages? Because of what caused the tariff to other countries?

Da hike in July 2025: Central government employees and pensioners can get Goodnues before Rakshabandhan. They can get at least one more DA (Dearness Allowance) under the current seventh pay commission.

In view of the latest data of inflation, the dearness allowance of central government employees is likely to increase by 3 to 4 percent in July 2025. This will provide relief to crores of central government employees of the country.

An announcement is made twice a year

The increase in dearness allowance is usually announced twice a year in February-March and September-October, which is implemented from January and July respectively. This helps the employees to struggle with rising inflation. In March this year, the current DA rate with 2 percent hike is 55 percent. DA is given to government employees, while DR pensioners get.

How is the calculation of DA?

Calculation of dearness allowance is done for laborers based on All India Consumer Price Index for Industrial Workers (AICPI-IW). The AICPI-IW index is released on the basis of retail prices raised from 317 markets of 88 industrial centers in the country.

Its information is given by the Labor Bureau associated with the Ministry of Labor and Employment every month that how much inflation has increased or reduced for the laborers and then on the basis of this, it is decided how much dearness allowance is to be increased.

In March 2025, the meter of inflation was at AICPI-IW 143, which increased to 144 by May. According to this, there can be an increase of three to four percent in dearness allowance. The government calculates DA on the basis of the average of the CPI-IW data of the last 12 months and the formula mentioned under the 7th Pay Commission.
Dearness allowance (%) = [(12-महीने का औसत CPI-IW – 261.42) ÷ 261.42] × 100

Here is the time base assumed under the 261.42 Seventh Pay Commission.

CPI-A and CPI-RL fall in both

However, the CPI-IW data for May 2025 has not yet been fully released, yet it is being broadly estimated by the new trend of inflation. According to the Ministry of Labor, retail inflation for agriculture and rural workers declined to 2.84 percent and 2.97 percent respectively in May 2025, which is more than 3.5 % in April. Both CPI-A and CPI-RL have reduced marginally to 1305 and 1319 points, which shows a decline in rural inflation.

Although the CPI-Al and CPI-Rl are not directly used for calculations of dearness allowances, they indicate widespread inflation trends that may also appear in CPI-IW. If the CPI-IW remains stable in the coming months or increases marginally, the government can approve the increase of 3-4 percent in dearness allowance, which will make the dearness allowance 58 % or 59 percent. The final hike will be detected only after the release of the CPI-IW data of June 2025.

Also read:

India’s core infrastructure sector is moving fast, growth at three months high level in June

Da hike: Even before the financial year starts, the Modi government has taken a big decision on government employees. On Friday, the central government has decided to increase dearness allowance by 2 percent. That is, now DA has increased from 53 percent to 55 percent, which will increase the salary of millions of employees.

What is DA and why?

Dearness Allowance (DA) means dearness allowance, government employees are given to reduce the impact of inflation. Actually, the basic salary decides the pay commission every 10 years, but DA changes every 6 months, so that the effect of inflation is reduced. The last time in July 2024, DA was increased from 50 per cent to 53 per cent.

When and how DA grows?

The government increases DA twice a year, January and July. However, the announcement may be late, but DA is calculated based on the AICPI-IW (inflation data) of January and December. Let me tell you, the decision of the cabinet applies only to the employees of the central government. However, later state governments usually follow the Center, they can increase DA at different times or at different rates.

What is AICPI-IW index?

This is a measure of inflation, on the basis of which DA is fixed. It issues the Labor Bureau under the Ministry of Labor.

How much money will increase from Da Hike?

If the basic salary of an employee is Rs 50,000, then he used to get a DA of Rs 26,500 on the basis of first (53 percent DA). But now after increasing 2 percent, DA (55 percent). Now, 27,500 rupees DA will be available now. That means profit of Rs 1,000 per month.

Also read: Minimum Balance Penalty Report: Banks are blowing thousands of crores of rupees silently from your pocket! Is the robbery being really being put in the name of ‘minimum balance’?