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8th Pay Commission News: The 8th Pay Commission is expected to be set up soon, with hopes of more than 1 crore beneficiaries getting higher each day. The provisions under the 8th Pay Commission are likely to be implemented by FY27, significantly boosting salaries and pensions of government officials.
8th Pay Commission: How much salary will increase?
According to a report by Ambit Institutional Equities, the 8th Pay Commission’s recommendations are expected to hike salaries of government employees and pensioners by 30-34 per cent.
“We expect the 8th Pay Commission to announce a hike of 30-34 per cent for salaries and pensions (~15.5 per cent of total expenditure) to cover ~11 million beneficiaries to boost consumption,” the report said.
The move will be in line with the Centre’s earlier decision to cut taxes amounting to ₹1 trillion in FY26, it added.
The 8th Pay Commission salary hike would however cost the Centre around an additional ₹1.8 trillion when implemented at this rate, as per the report.
The 8th Pay Commission’s recommendations will directly benefit approximately 44 lakh central government employees across various ministries and departments, along with 68 lakh pensioners.
Compensation structure of govt employees
To understand how the new salaries for central government employees will be calculated, here’s a look at their salary structure —
Breakdown of salaries
According to data cited by the report, the basic pay of employees accounts for 51.5 per cent of the employees’ total income. Dearness allowance makes up around 30.9 per cent, HRA around 15.4 per cent and travel allowance around 2.2 per cent.
Fitment factor and effect on DA
The 7th Pay Commission set the fitment factor to 2.57 per cent, hiking the basic pay to ₹18,000 minimum. However, DA was reset to zero at the start of the new Commission. Consequently, the actual increase in the salary component was 14.3 per cent.
Therefore, a 2.57 fitment factor does not mean a 2.57 times increase in salary, as the hike was only implemented on the basic pay.
As soon as a Pay Commission ends, the dearness allowance (DA) becomes zero as the index is re-based. A similar effect is expected to happen under the 8th Pay Commission.
