DA increase: The recent increase in dearness allowance (DA) for current central government employees and dearness relief (DR) for pensioners by 3% for the period of July-December 2024 has been implemented by the Central Government. The revised DA has been effective since July 1, 2024, bringing the allowance to 53% of the basic pay.
This has sparked discussions about the potential merger of DA with the basic salary, reminiscent of a similar occurrence in 2004 when the DA was merged with the basic pay upon reaching the 50% threshold. There is speculation about whether the DA and DR will be automatically merged into the basic pay once the DA exceeds the 53% mark, given the historical merger that took place when the DA crossed the 50% threshold.
The government has upheld its position that Dearness Allowance (DA) will not be combined with basic pay, even though it has exceeded the 50% threshold. According to a senior government official, Dearness Allowance was integrated into basic pay during the 5th Pay Commission when the consumer price index increased by 50% compared to the index used by the prior pay commission.
What experts said
Vishal Gehrana, Principal Associate, Karanjawala & Co. and Advocate on Record, Supreme Court, told the Economic Times: “In earlier systems like 5th Central Pay Commission, when DA touched 50%, it was merged with the basic salary to simplify wage structures and ensure that employees’ base pay reflected real-time inflation demands. This was seen as a way to avoid having DA rise indefinitely, which could create distortions in compensation systems, particularly as DA is often a larger percentage of pay than other components. However, this practice was discontinued under the 6th and 7th Central Pay Commissions, which took a more flexible approach to wage structure management.”
Similar views were shared by other experts. “The increased DA will not be included in a central government employee’s basic pay,” said Debjani Aich, Partner, IndusLaw.
Sanjeev Kumar, Partner, Luthra and Luthra Law Offices, India, said: “The 7th Pay Commission report did not recommend any such measure.”
Gehrana added: “Under the 7th Central Pay Commission, the new system has evolved where crossing the 50% DA threshold does not automatically increase other allowances. Presently, the revision of these components is not attached directly to DA but is subject to a separate decision by the Government of India. In simple words, without an official notification or policy from the Government of India, there will be no modification to the allowances like HRA or TA, even if DA touches the 53% mark.”
When will DA increase again?
The government revises DA and Dearness Relief (DR) for employees and pensioners twice a year, typically in March and September or October. These revisions become effective from January and July, respectively. Normally, central government employees receive their April and October salaries along with arrears of two to three months.
The next increase in Dearness Allowance (DA) will be announced before the Holi festival in March 2025. The hike will take effect from January 2024. T
