Central government employee and pensioner groups have put forward their recommendations to the 8 th Pay Commission, highlighting the need to boost the annual increment rate and to merge the dearness allowance (DA) with the basic pay at a certain stage.
One of the main reasons for this proposal is that a higher annual increment and the DA merger can accelerate the growth of an employee’s basic salary, providing relief to all, especially those at the lower levels of the pay scale. Currently with a 3% annual increment, a Level 1 employee’s basic salary of Rs 18,000 could rise to Rs 23,486 (30.47%) over a decade.
In addition to this, they receive DA, house rent allowance (HRA) and transport allowance (TPTA). However, both DA and HRA are tied to the basic pay, while TPTA remains fixed and only increases when DA reaches 50%.
A higher annual increment and merger with DA can increase their basic salary substantially and the overall payout to a great extent.
An expert illustration shows how basic salary will double in just seven years at a 7% annual increment rate and the merger of DA with basic pay when dearness allowance reaches 25%.
What are key employee bodies’ recommendations about annual increment hike and dearness allowance? The National
Council of the Joint Consultative Machinery (NC-JCM), the main central government employee body, proposes a 6% annual increment in its memorandum to the 8 th Pay Commission. It wants all allowances to be increased by three times and then be linked with the DA hike.
Some organisations like the National Federation of Postal Employees (NFPE) and the All India New Pension Scheme Employees Federation (AINPSEF) want DA to be merged with basic pay when it reaches 25%. Organisations such as Indian Railways' Supervisors' Association (IRTSA) and Pragatisheel Shikshak Nyaya Manch (PSNM), on the other hand, want DA to be merged with basic pay at 50%.
| Organisation | Proposed Annual Increment | Proposed DA |
| National Council of the Joint Consultative Machinery (NC-JCM) | 6% | All allowances to be increased by three times and to be linked with DA increase |
| National Federation of Postal Employees (NFPE) | 6% | At 25%, DA should be merged with basic pay |
| All India New Pension Scheme Employees Federation (AINPSEF) | 7% | At 25%, DA should be merged with basic pay |
| Indian Railways' Supervisors' Association (IRTSA) | 5% | At 50%, DA should be merged with basic pay |
| Pragatisheel Shikshak Nyaya Manch (PSNM) | 7% | At 50%, DA should be merged with basic pay |
| All India Defence Employees' Federation (AIDEF) | 6% | All allowances to be increased by three times and to be linked with DA increase |
How higher annual increment, DA merger may double basic salary of employees in 7 years?
Manjeet Singh Patel, national president of the All India NPS Employees Federation (AINPSEF), in a projection shows how at a fitment factor of 2.1, annual increment of 7% and a merged DA at 25% with basic pay, the basic pay of an employee can double in seven years.
Projections of salary of Level 1 employee in 8th Pay Commission
| Basic pay | ₹ 18,000 |
| Revised basic pay at 2.1 fitment factor (8th CPC) | ₹ 37,800 |
| Date | Basic Pay (₹) | DA Rate | DA Amount (₹) | Gross Salary (₹) | Gross Salary increase |
| 01-Jan-26 | 37800 | 0% | 0 | 37800 | |
| 01-Jan-27 | 40446 | 4% | 1617.84 | 42063.84 | 11% |
| 01-Jan-28 | 43277.22 | 8% | 3462.1776 | 46739.3976 | 24% |
| 01-Jan-29 | 46306.625 | 12% | 5556.795 | 51863.4204 | 37% |
| 01-Jan-30 | 49548.089 | 16% | 7927.6943 | 57475.7834 | 52% |
| 01-Jan-31 | 53016.455 | 20% | 10603.291 | 63619.7465 | 68% |
| 01-Jan-32 | 56727.607 | 24% | 13614.626 | 70342.2331 | 86% |
| 01-Jan-33 | 60698.54 | 28% | 16995.591 | 77694.131 | 106% |
Note: These are projections. The salary of a Level 1 employee in the 8th Pay Commission may differ.
Assumptions
- Basic salary in 7 th Pay Commission: ₹18,000
- Basic salary on 1 January 2026 (At 2.1 fitment factor): ₹37,800
- Annual increase in basic salary: 7% (compounded every year)
- Dearness Allowance (DA): 0% on January 1, 2026
- From 1 July 2026 onwards, increases by 2% every six months
- On 1 January 2033, 25% DA is merged with basic pay.
For a person drawing revised salary in the 8 th Pay Commission with effect from January 1, 2026, Patel says, at a 4% annual growth rate, DA will reach 25% in January 2033, and at that time, the employee’s basic salary will double.
