8th pay commission: The Central Government announced the 8th Pay Commission in January 2025. This is expected to benefit more than 1 crore central employees and pensioners across the country. However, the Terms of Reference (Tor) i.e. the work is currently pending with the appointment of commission chairpersons and members.
How long can the Commission be implemented?
According to the report of the Ambit Institutional Equites, the recommendations of the 8th Pay Commission can be introduced by the end of 2025. It is expected to be implemented from January 2026. However, the final decision will take place only after submission of reports and approval of the government.
The report also states that if the recommendations of the Commission are applicable from FY27, it can increase the salary and pension of government employees by 30 to 34 percent.
How much can the fitment factor be?
The commission has not yet been formally formed, but market experts estimate that this time the fitment factor may be between 1.83 and 2.46. The Fitment Factor is a multiplier, based on which the basic salary of the employees is modified.
According to the report of AMBIT Capital, “Fitment factor can remain in this realm in view of the trend of salary hike in previous pay commissions”.
How does a fitment factor work?
If an employee has an existing basic salary of ₹ 18,000 and the fitment factor 2.0 is fixed, the revised salary will be ₹ 36,000. This does not include other benefits such as dearness allowance (DA), house rent allowance (HRA), which further increase the tech-home salary.
How will the work increase on the new commission?
As soon as the Commission’s formal structure and term of references are fixed, the report is expected to come by the end of 2025. After this, a new pay scale can be implemented from FY27 with cabinet approval.
This step will not only increase the income of government employees, but can also prove to increase the speed of demand -based economy.