As the 8th Pay Commission process gathers pace, employee representatives have started putting forward their demands—some of which may bring about significant changes in the pay structure, allowances and pension benefits of central government employees. In its latest memorandum submitted to the 8th Pay Commission, the staff side of the National Council (Joint Consultative Mechanism – NC-JCM) has proposed comprehensive changes in the allowances. These proposals include merging Dearness Allowance (DA) with basic pay once it reaches the 25 per cent level; tripling various benefits; And that includes linking them more strongly to inflation. Let us take a closer look at the specific demands put forward by the employee side.
**Merger of DA at 25 percent level**
One of the most important proposals is that whenever DA (and dearness relief—DR for pensioners) exceeds 25 per cent, it should be merged with basic pay and basic pension respectively. At present, the DA/DR is 60 percent. The Central Government has recently announced a 2 percent increase in this important allowance. The memorandum said prices should be calculated based on market rates rather than government-fixed rates, as government rates can vary by up to 25 percent. “We have proposed that the 8th CPC should recommend that if DA/DR exceeds 25 per cent, it should be merged with basic pay and basic pension.”
This point is important because, at present, DA is revised twice a year to compensate for inflation. By merging it with the basic pay, the salary and pension base will increase permanently. This will also have a cascading effect on other components such as House Rent Allowance (HRA), gratuity and retirement benefits. The employee side has argued that while DA should remain completely inflation linked, it should also be mixed with the basic pay from time to time to prevent any discrepancy within the pay structure.
**Why is there a demand for change in the calculation of DA?**
The memorandum highlights the shortcomings of the existing system. The Consumer Price Index (CPI) may not accurately reflect the actual spending patterns of government employees.
The current method, which is based on a 12-month average, captures the true impact of inflation over a period of time. Proposal: Adoption of a system based on 6 month average (which is in line with the changes in Dearness Allowance/DA).
Suggestion of using market-based prices instead of government rates.
Revision of HRA: Up to 40% of basic salary
In view of the rising housing cost, a significant amendment to the House Rent Allowance (HRA) has been proposed:
X Category Cities (Population: more than 50 lakh): 40% of basic pay
Y category cities: 35%
Z category cities: 30%
Additionally, the memorandum suggests linking HRA with Dearness Allowance (DA), so that changes occur automatically; Also, it is proposed that the classification of cities be reviewed every five years. An HRA component has also been proposed for pensioners—an important new demand.
Three times increase in many allowances
In view of rising inflation, the staff side has proposed to triple several allowances:
Transport Allowance → 3 times increase
Daily allowance (travel) → 3 times increase
Patient Care/Nursing Allowance → 3 times increase
Uniform allowance → 3 times increase
It is also proposed that most of these allowances be linked to Dearness Allowance (DA), so that they are automatically adjusted with inflation.
Risk and Difficulty Allowance: Minimum ₹10,000/month
For employees working in high-risk roles:
Railways, Defence, Healthcare, Sanitation, Fire Services
The demand is that a minimum of ₹10,000 per month be provided as risk and hardship allowance, and it be linked to DA so that it can be increased from time to time.
Should all employees on duty be allowed to travel by air?
a specific operational demand
All employees on official duty should be allowed to travel by air.
AC taxis should be allowed for road travel.
**Ration:** Booking travel at the last minute often makes it difficult to get a train reservation.
**Compensation for overtime and extra duties**
The following points are emphasized in the memorandum:
Working hours often increase due to staff shortages.
Many employees do not receive any compensation for overtime work.
Proposal:
Employees who fall outside the scope of the Factories Act should get a flat rate (Basic Pay + DA) as overtime compensation. Significant changes are proposed in relation to education and child benefits. Children’s Education Allowance (CEA) should be increased to ₹10,000 per month per child. Hostel subsidy should be ₹35,000 per month. The scope of these benefits has been expanded to include postgraduate and professional courses also. Better benefits are proposed for disabled children.
Other main demands
Additional Qualification Allowance → 10% of basic pay
Cooking allowance → should be increased to ₹3,000 per month
Sports promotion → The current limit on salary increase should be removed
Night Duty Allowance → There should be no upper limit on basic pay
What is the current status of 8th Pay Commission? Last year, the government had released the ‘Terms of Reference’ (ToR) for the 8th Pay Commission, paving the way for a review of the pay structure, revision of allowances and pension-related changes. Although the recommendations of the Commission are still awaited, such memorandums are indicative of the demands being put forward by the employee unions.
If these proposals are accepted, what changes might occur?
If implemented, these proposals could lead to an increase in basic pay due to merger of DA, a substantial increase in monthly ‘take-home pay’, better inflation protection through DA linked allowances, and improved benefits for pensioners. However, the final decisions will ultimately depend on the recommendations of the Pay Commission and the approval of the government.