Ever since its approval in January 2025, the 8th Pay Commission has been raising expectations of salary and pension revision for over 50 lakh central government employees and 65 lakh pensioners. But recent reports have estimated that the fitment factor would be fairly low, disappointing those who had hoped for large financial winds. As it is supposed to be implemented in late 2026 or early 2027, the commission yet remains a proposal whose formal constitution remains to be considered.
Fitment Factor and Salary Increase in Perspective
The Kotak Institutional Equities report cited estimates of the fitment factor at 1.8 as compared to 2.57 used for the 7th Pay Commission, which gave an increase of 14.3% to salaries. This could mean only a 13% increase, though, raising the minimum basic salary to somewhere around ₹32,400 from ₹18,000 earlier, much less than the earlier expectation of ₹51,000. The fitment factor is a multiplier to be applied to basic pay, marring the payout when the DA is reset to zero on its implementation.
Effect on Employees and Pensioners
For the employees, especially the Grade C employees who constitute 90% of the workforce, a mere 13% was not what they wanted. The 90% employees in Grade C class had presumed major increases. For an employee having a basic pay of ₹50,000, Rs.77,500 is given for 55% DA. The maximum fitment factor that can be applied using 1.8 × 77,500 = ₹90,000. This, however, is off-set by the resetting of DA. Pensioners receive proportional increments, but they have no perks such as HRA or TA. This increase exists to the tune of ₹2.4–3.2 lakh crore for the government.
The Timeline of Implementation and Associated Challenges
The Eighth Pay Commission has yet to come into being, with the government yet appointing its members and finalizing its Terms of Reference. Traditionally, the commissions take 18 months to complete their reports and 3 to 9 months for cabinet approval, which may place the implementation towards the latter parts of 2026 or the very beginning of 2027. The delay has raised concerns among employees, in particular retirees, about arrears for allowances being lost. Consultations with various stakeholders including the Ministries of Defence and Home Affairs are underway.
Economic and Employee Expectations
On one hand, this hike will boost consumer spending and on the other, the lower fitment factor gave jitters to financial planners. Employee unions, including the National Council-JCM, are asking for a factor nearer to 2.57 or more, citing inflation and economic necessities. The government, on the other hand, is playing a cautious fiscal game, and any changes next year in the DA base year (in 2026) will mean a tweak to this calculation with repercussions on salary structures in days ahead.
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