8th Pay Commission: There is good news for the Central Government employees. The government has recently announced the Terms of Reference (ToR) of the 8th Pay Commission, that is, the working methods and guidelines.
With this, the hopes of the employees have increased that there could be a big increase in their salaries, allowances and pensions in the next few years. The Commission will have to submit its recommendations to the government within 18 months, that is, by April 2027. After that, the Labor and Finance Ministry will approve this report. After this, it will be implemented after being approved by the Cabinet.
This means that the 8th Pay Commission will be implemented only by Diwali of the year 2027. However, when the 8th Pay Commission will be considered implemented depends on the government.
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The 8th Pay Commission will consist of three members, with Justice Ranjan Desai as its chairperson. Professor Pulak Ghosh has been appointed as a part-time member, and Pankaj Jain as its member-secretary. The commission will be required to submit its recommendations to the government within 18 months, i.e., by April 2027. However, if the commission wishes, it may submit interim reports periodically.
What is stated in the ToR?
To review the salaries, allowances, bonus, gratuity and Performance Linked Incentive (PLI) of employees and pensioners.
To maintain equality and financial balance so that there is not too much burden on the government.
To give recommendations keeping in mind the economic condition and financial discipline of the country.
It also remains to be seen what impact this will have on state governments as they usually implement central decisions with some modifications.
Apart from this, the salary structure of public sector (PSU) and private sector employees will also be compared.
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When will the commission submit its report?
According to a government notification, the commission is required to submit its report within 18 months from the date of its formation. Its deadline is April 2027. After the report is submitted, the government will review it and, upon approval, implement the new salary structure.
How much can the salary increase?
The biggest question for employees is how much their salaries will increase. According to estimates from financial institutions Kotak Institutional Equities and Ambit Capital, the fitment factor this time around could be between 1.8 and 2.46.
If the fitment factor is set at 1.8, the basic salary of Level-1 employees, such as attendants or peons, will increase from ₹18,000 to ₹32,400. While this appears to be an 80% increase, the actual increase will be around 13-15% since the dearness allowance (DA) will reset to 0% upon implementation of the new salary.
Ambit Capital believes that…
At 1.82× factor, the salary will be ₹32,760 (approximately 14% increase)
₹38,700 at 2.15× factor (approximately 34% increase)
₹44,280 at 2.46× factor (approx. 54% increase)
But keep in mind, this is only a calculation of basic pay. When allowances like DA, HRA, and transport allowance are added, the actual salary increase will be revealed.
Decision on bonus, gratuity and PLI also
The 8th Pay Commission will review not only salaries but also bonuses, gratuity, retirement benefits, and performance-linked incentives (PLI). The 7th Pay Commission was last implemented in 2016 for government employees, resulting in a salary increase of approximately 14-16%. Now, with the implementation of the 8th Pay Commission, employees are expecting significant relief again.
