8th Pay Commission: DA Growth Slowest Since 5th CPC, What It Means For Future Salary Hike

Dearness allowance, which is paid to the offset the impact of inflation, has seen the slowest pace of growth under the 7th Central Pay Commission (CPC), as compared to the 5th and 6th pay panels. This is expected to have an impact on the effective wage hike under the 8th Pay Commission.

DA, along with dearness relief that is paid to pensioners, is reset to zero as soon as the new pay commission is rolled out. Under the 6th CPC — the tenure of which lasted from 2006–2016 — DA increased to a massive 125% of the basic pay.

This was higher as compared to 74% increase in DA during the tenure of 5th CPC — that lasted from 1996 to 2006.

Under the 7th CPC, the DA presently stands at 58% of the basic pay. With the upcoming revision in March, the allowance is expected to rise to about 60%.

DA is revised bi-annually in March and October, with the revisions coming into effect retrospectively from January and July.

The 8th Pay Commission report is not expected to be tabled before mid-2027. The panel, formed in November 2025, has been given an 18-month period to submit its recommendations. Till mid-2027, the DA would be revised at least thrice — March and October this year, and again in March 2027.

Considering the average hike of 2-4% each, the cumulative DA would hover around 70% before the 8th Pay Commission gets rolled out.

Notably, one of the main reasons behind the slow pace of DA growth under the 7th CPC has been the 18-month pause in revision during the Covid-19 period. At the peak of the pandemic, the government decided to freeze the periodic increase in DA and DR, as the health crisis was expected to add a sharp burden on the exchequer.

What slow DA growth means for salary hike under 8th Pay Commission?

The DA is reset to zero whenever a new pay commission is implemented, and subsequently raised at every six months according to the prevailing rate of inflation.

In this backdrop, a relatively lower DA will lead to a sharper wage hike even if the 8th Pay Commission recommends a modest fitment factor. To understand, one has to see how the real salary increased in 2016, when the 7th Pay Commission was rolled out.

The 7th Pay Commission had recommended a fitment factor of 2.57. This raised the basic minimum salary of Rs 7,000 to Rs 18,000 (Rs 7,000 x 2.57 or 157%) in 2016. However, the real salary growth was way lower if one takes the resetting of DA to zero into account.

At the end of 6th Pay Commission, the overall minimum pay stood as follows: Rs 7,000 (basic salary) + Rs 8,750 (DA) + Rs 2,100 (House Rent Allowance) + Rs 1,350 (Travel Allowance) = Rs 19,200.

Under the 7th Pay Commission, the overall minimum wage was revised in the following the manner in 2016: Rs 18,000 (basic salary) + Rs 4,320 (HRA) + Rs 1,350 (TA) + Rs 0 (DA) = Rs 23,670.

Therefore, from Rs 19,200 to Rs 23,670, an effective growth of 14.3% was seen in the salary of central government employees following the rollout of 7th Pay Commission a decade ago.

With DA presently at less than half of what it was under the 7th Pay Commission, the effective wage hike under the 8th Pay Commission is expected to be relatively higher.