Prime Minister Narendra Modi-led Union Cabinet approved the constitution of the 8th Pay Commission to revise the salaries of central government employees, Union Minister Piyush Goyal announced earlier this year. Although the government has approved the formation of the Commission, an official notification has not yet been issued.
The Pay Commission, typically constituted every 10 years, revises salaries and allowances based on the fitment factor.
8th Pay Commission: What is the fitment factor?
Salaries, pensions, and allowances are revised under pay commissions using the fitment factor. This key multiplier determines salaries and pensions for government employees. It is set by considering various factors such as inflation, employee needs, and government affordability.
Presently, the salary structure for central employees is based on the 7th Pay Commission fitment factor, which came into effect in 2016.
8th Pay Commission: How does the fitment factor impact salaries?
The current Pay Commission applied a fitment factor of 2.57 per cent. However, this does not mean salaries increased by 2.57 times, as it was only added to the basic pay, raising it to a minimum of ₹18,000. The actual increase in the salary component was 14.3 per cent. Notably, DA is reset to zero at the beginning of the new Commission, as the index is re-based. This is expected to happen under the 8th Pay Commission as well.
8th Pay Commission: Salary structure of government employees
The salary of a government employee consists of basic pay, dearness allowance (DA), house rent allowance (HRA) and transport allowance. The basic salary of employees constitutes 51.5 per cent of their total income. DA accounts for approximately 30.9 per cent, HRA for about 15.4 per cent and travel allowance for around 2.2 per cent, as Mint reported earlier, citing a report by Ambit Institutional Equities.
8th Pay Commission: Who are the beneficiaries?
The 8th Pay Commission is expected to benefit nearly 50 lakh central government employees, including defence personnel. After the revision, nearly 65 lakh central government pensioners, including defence retirees, are expected to benefit.