Finance Minister Jaswant Singh announced the merger of  Dearness Allowance in the basic pay when he presented the Interim Budget. The Fifth Central Pay Commission had recommended that DA should be merged with the basic pay whenever it exceeded 50 per cent of the pay. At present, DA is at 59 per cent of the pay. The government, after re-examining this recommendation,  has decided that DA, to the extent of 50 per cent of the pay, will be merged with the basic pay. This will take effect from 1 April  2004.

The Fifth Pay Commission recommendations should have been brought into force in July 2002. But it did not take place. Even the Reserve Bank of India opined that in the current situation it is not possible for India to take up such a big financial burden. Six months ago in the Joint Consultative Machinery the trade unions demanded  such a merger, but the Finance Secretary vehemently opposed  the idea pointing out that lack of funds was the major constrain. One will have to think from where the new source of money has come. If the proposal of the government is not an election gimmick it will be a big financial gain for the workers.