The 8th Pay Commission has emerged as a major source of hope for central government employees and pensioners. While discussions around the new pay panel usually focus on the fitment factor and basic salary revision, this time the spotlight is also on Dearness Allowance (DA)—and surprisingly, its slow growth under the 7th Pay Commission could turn out to be a hidden advantage.

Experts believe that because DA levels have remained relatively low during the current pay commission cycle, the real salary increase under the 8th Pay Commission could be more meaningful, even if the headline hike appears modest. Understanding this requires a closer look at how DA works and how past pay commissions played out.

Why DA Growth Under the 7th Pay Commission Disappointed Employees

During the tenure of the 7th Pay Commission, DA growth has been noticeably slower compared to earlier pay commissions. As of early 2026, DA stands at around 58% of basic pay, with expectations that it may touch 60% after the next revision.

This is significantly lower than what employees witnessed during the 6th Pay Commission era, when DA had surged to 125% by the end of the cycle. One of the biggest reasons for this sluggish growth was the freeze on DA during the COVID-19 pandemic, when multiple scheduled hikes were put on hold to ease fiscal pressure on the government.

As a result, employees saw limited protection against inflation during this period, leading to widespread dissatisfaction with the overall impact of the 7th Pay Commission.

How Dearness Allowance Is Calculated

Dearness Allowance is revised twice every year—once in March (effective from January) and again in October (effective from July). It is linked to inflation data and is meant to safeguard the purchasing power of government employees and pensioners.

When inflation remains moderate, DA hikes also stay limited. This is exactly what happened during much of the 7th Pay Commission’s tenure, keeping overall DA growth lower than historical trends.

Why DA Becomes Zero When a New Pay Commission Is Implemented

One important but often overlooked rule is that DA is reset to zero when a new pay commission comes into effect. This happens because the accumulated DA is merged into the revised basic pay.

This is where the current situation becomes interesting. When DA levels are extremely high—as they were during the 6th Pay Commission—the reset to zero significantly reduces the visible impact of the salary hike. That was one of the main reasons why many employees felt that the 7th Pay Commission looked better on paper than in reality.

When Is the 8th Pay Commission Expected?

The 8th Pay Commission was reportedly constituted in November 2025 and has been given around 18 months to submit its recommendations. Based on this timeline, the report is expected by mid-2027.

Until then, DA is likely to see at least three more revisions. If inflation trends remain steady, DA could rise to around 70% before the new pay structure is implemented.

How Lower DA Could Lead to Higher Real Salary Growth

Ironically, lower DA levels before a pay commission revision can work in employees’ favor. When DA is relatively low, the revised basic pay under the new commission shows a stronger and more noticeable jump.

Even if the fitment factor under the 8th Pay Commission remains conservative, employees may still experience a better real salary increase compared to what they saw during the transition from the 6th to the 7th Pay Commission.

This could apply not only to serving employees but also to pensioners, whose pensions are directly linked to basic pay revisions.

What This Means for Central Government Employees

For central government employees and pensioners, the current DA scenario offers cautious optimism. While the 7th Pay Commission may have underwhelmed many, its slow DA growth could set the stage for a more impactful salary revision under the 8th Pay Commission.

If implemented wisely, the new pay structure could deliver stronger real income growth, better inflation protection, and improved financial stability—something employees have been waiting for since the pandemic years.

Disclaimer:
This analysis is based on trends from previous pay commissions and publicly available information. Final salary outcomes will depend on official recommendations and government approval once the 8th Pay Commission submits its report.