In a major boost to the Congress party's vote bank ahead of the general elections, the central government has announced the terms of reference for the 7th Pay Commission, which include merging of dearness allowance (DA) with basic pay.
The merger of DA with basic salary is already due since the DA has reached 100 per cent against the 50 per cent trigger for merger. The merger will help in drawing higher allowances as these are a proportion of the basic pay.
The DA merger will benefit over 5 million central government employees, including 3 million pensioners. It is estimated that the merger will raise salaries by up to 30 per cent.
Since the Sixth Pay Commission did not recommend merger of DA with basic pay, salaries of central government staff have now equalled their DA.
Early this month, the central government announced the constitution of the 7th Pay Commission with Ashok Kumar Mathur, retired Supreme Court judge and retired chairman of Armed Forces Tribunal, as its chairman.
''The prime minister has approved the composition of the 7th Central Pay Commission,'' a finance ministry release stated.
The announcement, came close on the heels of a 10 per cent hike in dearness allowance for the central staff, which raised total DA to 100 per cent of basic pay.
Central government employees have been pressing for the setting up of a pay commission after the DA rates touched 100 per cent of basic pay, double the percentage needed for merging DA with basic pay.
The Pay Commission will recommend a revised salary structure for central government employees - both in civil and military services.