Top News

In a development that might disappoint millions of central government employees and pensioners, the much-anticipated 8th Pay Commission is unlikely to offer a significant salary or pension hike. According to a recent report by Kotak Institutional Equities, the expected increase under the new commission could be limited to around 13%, shattering hopes of a bumper increment like that seen in the 7th Pay Commission.

Expectations vs Reality: What the Report Reveals

Employees and retirees were hoping that the 8th Pay Commission would replicate or exceed the salary and pension hike delivered by the 7th Pay Commission. However, Kotak's research—as cited by NDTV Profit—indicates a relatively modest adjustment this time. The primary reason? A lower fitment factor, which serves as a multiplier to calculate the new basic salary.

What is the Fitment Factor?

The fitment factor plays a key role in determining revised pay scales. It multiplies the existing basic salary to arrive at the new pay. Under the 7th Pay Commission, this factor was set at 2.57. The report suggests that under the 8th Pay Commission, the fitment factor could be as low as 1.8, which is approximately 30% lower than the previous rate.

Here’s how it breaks down:

As per the report, the Dearness Allowance (DA)—currently around 55% of the basic pay—will be reset to zero once the 8th Pay Commission comes into effect. That means the apparent 80% hike through the 1.8x fitment will actually translate into only 13–16% increase in real terms after DA is reset.

Delays Likely in Commission Formation

There is no official notification yet from the central government regarding the formation or implementation date of the 8th Pay Commission. However, a new notification from the Department of Personnel and Training (DoPT) concerning recruitment rules has sparked speculation that the process might be delayed further.

Some members of the National Council (JCM), representing employees, have voiced concerns. They are pushing for a minimum fitment factor of 2.57, the same as the 7th Pay Commission. However, they acknowledge the possibility that the government might stick to a lower 1.8 factor.

Financial Impact on the Government

The 7th Pay Commission imposed a financial burden of around ₹1.02 lakh crore on the central government. According to Kotak’s analysis, the 8th Pay Commission could increase that burden to ₹2.4 to ₹3.4 lakh crore.

This impact will be spread across approximately 33 lakh central government employees, most of whom fall under the Grade C category—a segment known for high spending behavior. This could, in turn, have implications for overall economic demand and consumption.

Final Word

While central employees were expecting a major salary upgrade, early estimates suggest that a modest 13% hike might be all they get. The government has not confirmed any timeline or formation of the 8th Pay Commission yet, and the actual implementation could take longer than expected.

For now, employees and pensioners should prepare for a realistic, not revolutionary, update to their pay scales, keeping expectations in check until formal announcements are made.