The Union Cabinet’s green light for the Terms of Reference (ToR) of the 8th Pay Commission has set the stage for another major overhaul of central government salaries and pensions.
Headed by retired Justice Ranjana Desai, the commission is expected to take several months to study pay structures, consult stakeholders, and recommend a fresh fitment factor – the crucial multiplier that determines revised salaries.
Fitment Factor in Focus
According to estimates from Kotak Institutional Equities and Ambit Capital, the 8th Pay Commission may propose a fitment factor ranging between 1.8 and 2.46.
This number, while seemingly technical, will have a direct impact on how much more central government employees earn once the new pay scales take effect.
If Kotak’s forecast of a 1.8 fitment factor holds true, the basic pay for Level 1 employees, including peons and office attendants, could rise from Rs 18,000 to Rs 32,400, reported The Financial Express.
That’s an impressive 80 per cent jump on paper. However, the effective increase would be smaller because the Dearness Allowance (DA) will reset to zero once the new pay commission is implemented. At present, the DA stands at 58 per cent, meaning the actual salary increase could hover around 13 per cent, factoring in existing allowances such as HRA.
Ambit Capital’s projections offer a slightly rosier picture. Its base-case scenario of a 1.82 fitment factor implies a 14 per cent effective raise, while a median 2.15 factor could push salaries up by around 34 per cent.
In the most optimistic scenario, a 2.46 fitment factor, the hike could reach as high as 54 per cent. For many lower-level employees, this could represent a meaningful financial boost after years of battling inflation and stagnant pay.
Calculating the Potential Pay Jump
Here’s how the numbers stack up for Level 1 staff:
Fitment factor 1.82: Basic pay of Rs 18,000 could increase to Rs 32,760
Fitment factor 2.15: Basic pay could rise to Rs 38,700
Fitment factor 2.46: Basic pay could soar to Rs 44,280
However, these figures reflect only the basic salary. Once the revised structure kicks in, the DA and other allowances will reset, so the effective take-home pay may not rise by as much as the headline numbers suggest.
For many central government workers, particularly those in Level 1 positions, even a modest improvement will offer relief amid rising living costs. It could also provide a psychological boost, restoring morale in the lower rungs of the bureaucracy who often struggle with pay compression.
Wider Impact and Expectations
The 8th Pay Commission’s recommendations will ripple far beyond government offices. An estimated 47 lakh central government employees and 68 lakh pensioners are expected to benefit from the revisions.
Historically, pay commission awards have had a trickle-down effect, prompting several state governments and public sector undertakings to align their own pay scales accordingly.
Justice Desai’s panel will now begin detailed consultations with employee unions, pensioners’ associations, and economic experts. Once the fitment factor and other recommendations are finalised, the report will be submitted to the government for approval, a process expected to take several months.
For millions of government workers, the wait for a pay bump is far from over. But with discussions of an 8th Pay Commission well underway and expectations of a fitment factor as high as 2.46, hopes of fatter paycheques and lighter hearts are rising across India’s administrative corridors.
