Lok Sabha Question Confirms 8th Central Pay Commission; Government Rules Out DA Merger

The Government of India has formally confirmed in Parliament that the Eighth Central Pay Commission (8th CPC) has been constituted, but made it clear that there is no proposal at present to merge Dearness Allowance/Dearness Relief (DA/DR) with basic pay or pension.

This clarification came in Lok Sabha Unstarred Question No. 212, answered on 1 December 2025 (Agrahayana 10, 1947 Saka) by Minister of State for Finance Shri Pankaj Chaudhary. The question was raised by Shri Anand Bhadauria, who sought details on the notification of the 8th CPC and on possible DA/DR merger as an immediate relief for employees and pensioners facing inflation.

Government Confirms 8th CPC Notification

Replying to parts (a) and (b) of the question, the Minister stated that the Government has notified the Resolution dated 03.11.2025 for the constitution of the Eighth Central Pay Commission. A copy of this Resolution has been placed in the Lok Sabha records as Annexure-I.

According to the Resolution issued by the Ministry of Finance (Department of Expenditure), vide F. No. 01-01/2025-E.III(A), the 8th CPC has been constituted with the following composition:

Chairperson: Smt. Justice Ranjana Prakash Desai
Member (Part-Time): Prof. Pulak Ghosh
Member-Secretary: Shri Pankaj Jain

The Commission will have its headquarters at New Delhi and has been mandated to submit its recommendations within 18 months from the date of its constitution. It has also been permitted to send interim reports on specific matters, if considered necessary, as and when recommendations are finalised.

Who Will Be Covered Under the 8th CPC

The terms of reference (ToR) of the Commission, as reproduced in the Annexure, specify that the 8th CPC will examine and recommend changes in pay, allowances and other facilities/benefits—either in cash or kind—for a wide range of Central Government-related personnel. The categories include:

Central Government employees – industrial and non-industrial
All India Services personnel
Defence Forces personnel
Personnel of Union Territories
Officers and employees of the Indian Audit and Accounts Department
Members of regulatory bodies (excluding the RBI) set up under Acts of Parliament
Officers and employees of the Supreme Court
Officers and employees of High Courts whose expenditure is borne by the Union Territories
Judicial officers of subordinate courts in Union Territories

For judicial officers, the Commission has been directed to adhere to the principle laid down by the Supreme Court in its judgment dated 24 August 1993 in All India Judges’ Association & Others vs Union of India & Others—namely, that service conditions of judges should not be linked with those of the administrative executive and must meet the special needs of the judiciary.

Key Mandate of the 8th CPC

Beyond revising basic pay, the terms of reference assign a broad and detailed mandate to the Eighth Central Pay Commission. Among the important tasks are:

1. Pay, Allowances and Benefits

The Commission will:

Examine and recommend changes in emoluments, including pay, allowances and other facilities/benefits.
Keep in view rationalisation of structures, contemporary functional requirements, and the specialised needs of various Departments, agencies and services.

2. Emolument Structure to Attract Talent

The 8th CPC has been asked to:

Work out an emolument structure conducive to attracting talent to Government service.
Recommend a framework that promotes efficiency, accountability and responsibility in the work culture.

3. Bonus and Incentive Schemes

The Commission will:

Review existing bonus schemes with reference to performance and productivity.
Suggest general principles and financial parameters for an appropriate incentive scheme to reward excellence in productivity and performance.

4. Review and Rationalisation of Allowances

The terms of reference require the Commission to:

Review existing allowances and the conditions of their admissibility.
Recommend rationalisation of allowances, keeping in view the multiplicity of allowances currently in force.

5. Gratuity and Pension-Related Matters

The Resolution specifically directs the 8th CPC to examine:

Death-cum-Retirement Gratuity (DCRG) of employees covered under the National Pension System (NPS), including the Unified Pension Scheme (UPS), and make recommendations thereon;
DCRG and pensions of employees not covered under NPS (including UPS) and make recommendations keeping in view the broader fiscal and policy parameters mentioned in the Resolution.

6. Economic and Fiscal Considerations

While making its recommendations, the Commission has to keep in view, among other factors:

The economic conditions in the country and the need for fiscal prudence;
The need to ensure adequate resources for developmental and welfare expenditure;
The unfunded cost of non-contributory pension schemes;
The likely impact of its recommendations on the finances of State Governments, which generally adopt Central Pay Commission recommendations with suitable modifications;
The prevailing emolument structures, benefits and working conditions available to employees in Central Public Sector Undertakings and the private sector.

Commission’s Working Arrangements

The Resolution empowers the 8th CPC to:

Devise its own procedure for conducting business;
Appoint Advisors, Institutional Consultants and Experts as necessary;
Call for information and evidence from Ministries, Departments and other agencies.

All Ministries and Departments of the Government of India have been directed to extend full cooperation by furnishing information, documents and assistance as required. The Government has also expressed trust that State Governments, Service Associations and other stakeholders will extend their fullest cooperation to the Commission.

No Proposal to Merge DA/DR with Basic Pay

On the second part of the question, concerning merger of Dearness Allowance/Dearness Relief with basic pay or pension, the Government’s stand is categorical. Replying to parts (c) to (e), the Minister stated that:

“No proposal regarding merger of the existing Dearness Allowance with the Basic Pay is under consideration with the Government at present.”

The reply further explains the current system:

DA/DR is intended to adjust the cost of living and to protect Basic Pay/Pension from erosion in real value due to inflation.
The rates of DA/DR are revised every six months,
Revisions are based on the All India Consumer Price Index for Industrial Workers (AICPI-IW) as released by the Labour Bureau, Ministry of Labour and Employment.

Thus, while the 8th Central Pay Commission has been formally constituted and notified, the long-standing demand from some quarters for merger of DA/DR with basic pay as an interim relief has not been accepted, and no such proposal is under consideration at this stage.

What This Means for Central Government Employees and Pensioners

From this Lok Sabha reply and the attached Resolution, two clear takeaways emerge for Central Government employees and pensioners:

8th CPC is now officially in place
- The Commission has been formally constituted with defined composition, mandate, coverage and timeframe.
- It will review pay, allowances, pensions, gratuity and related benefits across a wide spectrum of services and recommend a revised structure.
DA/DR will continue under the existing mechanism
- There will be no merger of DA/DR with basic pay/pension for now.
- DA/DR will continue to be revised half-yearly based on AICPI-IW to offset the impact of inflation on salaries and pensions.

Employees and pensioners can, therefore, expect the next major change in their pay and pension structure to come through the recommendations of the Eighth Central Pay Commission, once its report is submitted and accepted by the Government, while DA/DR continues to be adjusted under the established index-based formula till then.

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