8th Pay Commission – How Much Increase In Salary, Pension, Dearness Allowance (DA) ?

In addition to benefiting central government employees, the 8th Pay Commission is expected to spur consumer spending

Just before the Union Budget is presented, the government has approved the 8th Pay Commission. It is set to benefit nearly 5 million (50 lakh) central government employees and approximately 6.5 million (65 lakh) pensioners across all ranks. Let us take a look at some of the key benefits of the 8th Pay Commission.

What is Fitment Factor?

Before looking into the hike in salaries and other benefits, it is important to understand how salaries and pension are calculated for central government employees. At the core of this assessment is the Fitment Factor. This is used for calculating any increase in the basic salary and pension amount for central government employees. The Fitment Factor is the primary tool used by the Pay Commission. To calculate the new pay package, the current pay is multiplied by the Fitment Factor.

Various aspects are considered for deriving the Fitment Factor. For example, it includes things like employee demands and requirements, inflation rate and debt burden on the government. In the 7th Pay Commission, the Fitment Factor was calculated at 2.57.

What will be Fitment Factor for 8th Pay Commission?

The government has not yet announced the Fitment Factor under the 8th Pay Commission. It will be announced after the value is finalized by the 8th Pay Commission. But estimates indicate that the Fitment Factor in 8th Pay Commission could go up to 2.86. That means that the basic salary of central government employees could actually triple under the 8th Pay Commission.

How much salary increase in 8th Pay Commission?

Let us understand the salary increase under 8th Pay Commission with an example. Suppose a government employee is getting Rs 40,000 as basic salary. Now, if the Fitment Factor is 2.5 (conservative estimate), the new salary amount will be Rs 40,000 x 2.5 = Rs 1 lakh. That is a massive boost in the basic salary amount. Government employees will be waiting eagerly for the 8th Pay Commission to announce the Fitment Factor.

How much increase in pension in 8th Pay Commission?

The hike in pension is expected to be around the same as the increase in salary. That means a Fitment Factor in the range of 2.5 to 2.8. For example, let us assume the current monthly pension of Rs 10,000. If the Fitment Factor is 2.5, the pension will increase to Rs 25,000 (10000 x 2.5).

How much increase in dearness allowance (DA) in 8th Pay Commission?

The dearness allowance (DA) is calculated as a percentage of the basic pay. As of now, the dearness allowance for government employees is 53%. Since salaries are set to increase under the 8th Pay Commission, the dearness allowance or DA will also increase. Both existing employees and pensioners will benefit.

When will the 8th Pay Commission be implemented?

The Pay Commission reviews the pay package of government employees after every 10 years. Keeping that in mind, it is likely that the 8th Pay Commission will come into effect from 1st January, 2026.