With more than one crore central government employees and pensioners eagerly awaiting updates on salary and pension revision, anticipation was to say the least. Announced in January 2025, the commission is to provide for salary, allowances, and pensions to nearly 48.62 lakh employees and 67.85 lakh pensioners. However, recent reports claim that the hike may yield above the modest scale and would thus break the hearts of many.
Expected Salary Hike And Fitment Factor
One of the factors that go into calculating the salary hike under the 8th Pay Commission is the fitment factor or the multiplier on the basic salary. According to Kotak Institutional Equities report, the fitment factor is to be fixed at 1.8, a sharp drop from 2.57 under the 7th Pay Commission. This could lead to a salary increase of a measly 13 percent, compared to the 14.3 percent hike that took place earlier. If one considers, for example, a basic salary of ₹18,000, this would swell to ₹32,400 under a 1.8 fitment factor, while under the 7th Pay Commission this would have swelled to ₹46,260. Expectations, therefore, have been saddened rather in light of such conservative estimation.
Implementation Timeline And Challenges
The 8th Pay Commission, approved by the Union Cabinet in January 2025, stands to be implemented from January 2026. However, the issues have arisen due to delays in formalizing the commission, including the appointment of its chairperson and members. The government is seeking the nod from stakeholders such as the National Council (JCM), the Defence Ministry, and state governments on the Terms of Reference. If such delays continue, employees would be debarred from timely revisions of allowance categories like House Rent Allowance (HRA) and Travel Allowance (TA), as these allowances do not attract arrears.
Potential Benefits And Allowances
Though kept in check, the 8th Pay Commission is expected to revise major components like DA, HRA, and health insurance schemes for the advantage of employees and pensioners. A major recommendation considered at the 34th SCOVA meeting in March 2025 is the hike in the Fixed Medical Allowance (FMA) for pensioners from ₹1,000 to ₹3,000 per month. Such measures are meant to keep salaries and pensions in tune with the increase in the cost of living, but how far this will be explored will be known only once the commission completes its work.
Economic And Social Issues
Establishment of the 8th Pay Commission is one for improving the quality of life of its workforce, says Prime Minister Modi, but economic analysts like D.K. Srivastava of Ernst and Young have warned of possible adverse effects on government expenditure in revenues and thereby the fiscal space for capital investment if very large increases are given in salaries and pensions. Organizations such as the Bharatiya Mazdoor Sangh and the Central Secretariat Service Forum have welcomed this decision, highlighting its importance in terms of employee welfare.
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