The Indian government has given the green light to establish the 8th Pay Commission, which will revise the salaries of approximately 50 lakh central government employees and the allowances of 65 lakh pensioners. This commission will not only increase the wages of central government workers but also adjust their Dearness Allowance.
Prime Minister Narendra Modi decided to form the 8th Pay Commission, as stated by Information and Broadcasting Minister Ashwini Vaishnaw. While the approval has been confirmed, the exact date for its formation has not been announced. The minister mentioned that the chairperson and two members of the commission will be appointed soon.
Since India’s independence in 1947, seven Pay Commissions have been established, with the most recent one formed in 2014 and implemented on January 1, 2016. The 7th Pay Commission resulted in an expenditure increase of Rs 1 lakh crore for the 2016-17 fiscal year.
What is the 8th Pay Commission?
The Pay Commission is a body set up by the Indian government to determine the salaries and benefits of central government employees and pensioners. The 8th Pay Commission will propose revisions to the salary and pension structure, leading to an increase in compensation and allowances.
Beneficiaries and Significance of 8th Pay Commission
The 8th Pay Commission will affect over 49 lakh central government employees and approximately 65 lakh pensioners. Initiating the process now allows ample time to receive and evaluate recommendations before the 7th Pay Commission’s term ends in December 2025. The government will consult with central and state authorities, as well as other stakeholders, during this process.
Pay commissions typically seek input from various parties before recommending salary structures, benefits, and allowances for government employees. Their suggestions are often adopted by state-owned organizations as well.
Implementing the commission’s recommendations typically results in increased consumer spending and economic growth, along with improved living standards for government employees. The central government usually establishes a pay commission every decade to revise employee compensation.
The commission also proposes formulas for adjusting dearness allowance and dearness relief for central government employees and pensioners to counteract the effects of inflation.
Key Changes from the 7th Pay Commission
The 7th Pay Commission, implemented on January 1, 2016, saw an expenditure increase of Rs 1 lakh crore for the 2016-17 fiscal year. It used a fitment factor of 2.57, despite employee unions requesting 3.68. This factor is used to calculate salaries and pensions.
As a result of the fitment factor revision, the minimum basic pay for central government employees increased from Rs 7,000 to Rs 18,000 per month. The minimum pension for retirees rose from Rs 3,500 to Rs 9,000. The maximum salary for serving employees was set at Rs 2,50,000, and the maximum pension at Rs 1,25,000.
Anticipated 8th Pay Commission Salary Increase
While the exact percentage of salary increases under the 8th Pay Commission has not been confirmed, reports suggest the fitment factor could rise from 2.57 to 2.86. This change could potentially raise the minimum basic salary from ₹18,000 to ₹51,480.
Historical Salary Increases
7th Pay Commission
The fitment factor was 2.57, meaning basic pay was multiplied by this amount for central government employees and pensioners.
6th Pay Commission
A fitment factor of 1.86 was used, resulting in a basic pay increase of up to 1.86 percent.
5th Pay Commission
This commission added 40 percent of the basic pay in the existing scale to the ‘existing emoluments’.
