Central government employees are in for some good news as the 8th Pay Commission is expected to bring a salary hike ranging between 10% and 30%. While there has been a lot of speculation about a massive 186% increase, experts suggest that a more moderate raise is likely. Let’s dive into the details and see what this means for employees.
The key to understanding the salary hike lies in something called the fitment factor. This is a multiplier used to calculate the new salary based on the current basic pay and Dearness Allowance (DA). According to Subhash Chandra Garg, former Finance Secretary of India, the fitment factor for the 8th Pay Commission is likely to fall between 1.92 and 2.08. This would translate to a salary increase of 10% to 30% for employees.
Garg also addressed the buzz around a fitment factor of 2.86, which some employee groups have been pushing for. He called this expectation unrealistic, saying, “Asking for a fitment factor of 2.86 is like asking for the moon—it’s just not going to happen.”
To understand how the new salaries will be calculated, we need to look at the current numbers. As of July 1, 2024, the DA stands at 53%. Garg estimates that by January 1, 2026, the DA could rise to around 60%, assuming a 7% increase in each of the next two installments. Starting with a base factor of 1.6, the pay commission will likely recommend an additional increase of 10% to 30%. For example, a 20% increase on the base factor of 1.6 would bring the fitment factor to 1.92. If the increase is 30%, the fitment factor would go up to 2.08.
To put this into perspective, let’s revisit the 7th Pay Commission. Back then, the fitment factor was set at 2.57, which bumped up the minimum basic pay from Rs 7,000 to Rs 18,000. This time, some had hoped for a fitment factor of 2.86, which would have pushed the minimum basic pay to Rs 51,480—a jaw-dropping 186% increase. But experts like Garg believe that’s too ambitious.
The Union Cabinet gave the green light to the 8th Pay Commission on January 16, 2025. The commission is expected to submit its report by the end of this year, and its recommendations will take effect from January 1, 2026. This timeline ensures a smooth transition before the 7th Pay Commission’s tenure ends on December 31, 2025. The new pay structure won’t just benefit current employees—central government pensioners will also see higher pensions starting in January 2026.
The central government has a long-standing practice of forming a pay commission every 10 years to review and adjust employee salaries. The 7th Pay Commission, implemented in 2016, followed the 6th Pay Commission, which was introduced in 2006. With the 8th Pay Commission now in the works, employees and pensioners are keeping a close eye on how it will shape their financial future.
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