Central employees and pensioners are expected to get more than a 30% salary hike from the 8th Pay Commission. There may be an additional burden of ₹ 1.8 lakh crore on the government, but it will benefit 1.12 crore beneficiaries and may increase consumption and demand in the country.

8th Pay Commission: Central employees and pensioners across the country are eagerly waiting for the announcement of the 8th Pay Commission. It is expected that this commission will be constituted soon, which will benefit about 1.1 crore beneficiaries.

According to government reports, the recommendations of the 8th Pay Commission can be implemented by the financial year 2026-27 (FY27). Its objective is not only to increase the income of the employees but also to give impetus to the economy by increasing consumption.

How much can the salary increase? Salary hike estimate

According to a report by Ambit Institutional Equities, the implementation of the 8th Pay Commission recommendations can lead to a 30% to 34% increase in the salary and pension of central employees and pensioners. This potential increase will directly affect about 44 lakh central employees and 68 lakh pensioners, i.e., a total of about 1.12 crore beneficiaries. However, to implement this salary and pension hike, the central government may have to bear an additional financial burden of about ₹ 1.8 lakh crore, which can have a significant impact on the total fiscal expenditure of the government.

8th Pay Commission: How is the salary decided?

The salary of government employees is divided into four main parts:

Basic Pay

This is the basic part of the salary, which is based on the seniority and grade of the employee.

Dearness Allowance (DA)

This is given to compensate for inflation. Currently, it has been increased to 50%.

For example: If Basic is ₹18,000 and DA is 50%, then DA = ₹9,000. Total Salary = ₹27,000

House Rent Allowance (HRA)

It varies according to the category of the city (X, Y, Z categories)

Transport Allowance (TA)

Employees are provided a fixed amount for travel expenses.

Salary Structure

Basic Pay: 51.5%

DA: 30.9%

HRA: 15.4%

TA: 2.2%

Fitment Factor and Impact on DA

Under the 7th Pay Commission, the fitment factor was fixed at 2.57, resulting in raising the minimum basic salary to ₹18,000. However, the Dearness Allowance (DA) was zeroed out as soon as the recommendations of the Commission were implemented, as the Consumer Price Index (CPI) was reset again according to the base year at that time.

Due to this, the actual increase in the total salary was limited to only 14.3%, as the increase was based only on the basic salary. On the same lines, even after the implementation of the 8th Pay Commission, the DA may be reset to zero, which may make the initial salary increase feel relatively less.

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