Tuesday, February 25, 2014

Whispers in Corridors: Merger of DA with basic pay this weekend; What about retirement at 62?

DURING the last few days, Delhi’s corridors of power have witnessed unprecedented speculation on the government’s possible masterstroke --- the merger of dearness allowance (DA) with the basic pay and raising of retirement age to 62 years, so as to woo over 50 lakh Central government employees and 30 lakh pensioners ahead of the general elections. The gossips in various departments and ministries have centred around…
the speculations that the cabinet would implement at least the merger of DA with basic pay, if not more, in this weekend after finance minister P Chidambaram reaches New Delhi from his visit to Australia. As the model code of conduct is likely to be implemented in the first week of March, it is quite logical to speculate that the UPA-II would dole out more to woo Central government employees.
For the sarkari employees, the merger of DA with basic pay means a lot as their allowances that are linked with basic pay will also increase proportionately. According to estimates, the merger will enable raising of salaries by up to 30 per cent.
The dearness allowance has been 90 percent of the basis pay since July 1, 2013, and it is widely believed that the DA will be hiked to 100 percent in the coming cabinet meeting. The hiking of DA is done after considering the retail inflation for industrial workers. But ahead of the polls, this would be just a small technicality for the government.
Earlier this month, the government constituted the 7th Central Pay Commission, the first step towards raising the salary of the Central government employees from January 1, 2016. The Commission will be headed by the retired Supreme Court judge Ashok Kumar Mathur. (Know more about 7th Pay Commission). The Cabinet has approved its terms of reference.
Further, the government has allocated Rs 500 crore to the Defence Pension Account in the current financial year itself for implementation of One Rank One Pension scheme for the defence forces of the country. Reportedly, it was the Congress vice-president Rahul Gandhi who pushed this scheme in the interim budget so as to reap political dividends.


  1. Will some reader inform us if the 50% DA is merged with BASIC PAY, how the pension will be fixed and what benefit pensioners may get.

  2. Sir,
    Suppose your pay is today Rs.100. You will get a pension of Rs. 50 and Rs. 50 as DA considering it to be 100%. Now , DA of 50% is merged. Your basic pay becomes Rs.150. The DA% would become 50. Your pension, therefore would be Rs.75 and DA of Rs.37.5. The total amount you would receive will be 112.50. Your pension has increased by 12.5%. Hope this helps.

  3. when the retirement age@62 will be confirmed? what % is the chance of implementation of this issue? plz help me with genuine info...plz

  4. @admin ... plz give update on retirement age 62.

  5. If the 50% DA is merged with BASIC PAY, the other allownces like TPT, HRA are also affected or only basic pay incresed? can anyone suggest me?

    1. HRA will not increase as the merged DA will be shown under a separate head dearness relief.
      As regards TPT, some relief maybe possible.

  6. good news to govt employees,congrats,but no one consider the sick psu employees wage revision,still they are getting 1987 pay scale in 2014.why the govt step motherly treatment for these sick psu employees.They are denied the wage revision 1002,1997,2007 and now 2012,Mr.PC have money to give others,(except sick psu)

  7. The methodology adopted for compensating the erosion in the real value
    of wages had been the merger of DA with Pay. The 5th CPC had recommended
    that the DA must be merged with pay and treated as pay for computing all
    allowances as and when the percentage of Dearness compensation exceeds
    50%.Accordingly even before the setting up of the 6th CPC the DA to the
    extent of 50% was merged with pay. Presently, the Dearness compensation is
    100% as on 1.1.2014.
    As on 1.1.2011, the DA was at the rate of 50%.The suggestion for
    merger of DA to partially compensate the erosion in the real wages
    was first mooted by the Gadgil Committee in the post 2nd Pay
    Commission period. The 3rd CPC had recommended such merger when the
    Cost of Living index crosses over 272 points i.e.72 points over and
    above the base index adopted for the pay revision. In other
    words, the recommendation of the 3rd CPC was to merge the DA when it
    crossed 36%.
    The Govt. in the National Council JCM at the time of negotiation
    initially agreed to merge 60% DA and later the whole of the DA
    before the 4th CPC was set up. The 5th CPC merged 98% of the DA
    with pay. It is, therefore, necessary that the Govt. takes steps to
    merge 50% of DA with pay for all purposes to compensate the
    erosion of the real value of wages of Central Govt. Gazetted
    Officers and employees.

  8. Is there any chance of pay revision in FCI?

  9. How about buying new submarines for navy, retiring obsolete Mig and buying new planes for air force instead of giving more money to corrupt govt. employees. What have they achieved that their salary should increase?