8th Pay Commission: How dearness allowance increased in 7th CPC salary, leading to 8th CPC

The announcement of the new pay commission came months after the dearness allowance (DA) payable to central government employees reached 50% of the basic pay.

In March 2024, the Ministry of Finance hiked the rate of DA by 4% to 50% with effect from January 1, 2024.

Moreover, the 8th CPC announcement after the DA reached 50% was on the expected lines.

The employees’ unions had previously urged the government to set up the 8th pay commission after the DA reaches 50%.

How dearness allowance increased since 2016

The rate of DA for central government employees has increased gradually since the implementation of the 7th pay commission.

Data shows the biggest jump in DA came in 2021, when it was raised from 17% to 31% with effect from July 1, 2021, after a gap of around 2 years.

Source: Ministry of Finance

Back in June 2023, the Railway Senior Citizens Welfare Society (RSCWS) had urged Finance Minister Nirmala Sitharaman to set up the 8th CPC from 1st January 2024 as DA was expected to rise to 50% by January 2024, according to a report by Financial Express.

DA is a part of the central government employees’ pay structure, which helps in countering the impact of inflation.

What 7th CPC said about pay revision

“It is also recommended that the matrix may be reviewed periodically without waiting for the long period of ten years. It can be reviewed and revised on the basis of the Aykroyd formula which takes into consideration the changes prices of the commodities that constitute a common man’s basket, which the Labour Bureau at Shimla reviews Periodically,” the 7th CPC said in its report.

“It is suggested that this should be made the basis for revision of that matrix periodically without waiting for another Pay Commission,” it added.