8th Pay Commission: The new salary structure may increase the total remuneration by 30-34%, which will affect more than 1 crore employees and retired employees across the country. This can put a heavy burden of Rs 1.8 lakh crore on the government treasury.
8th Pay Commission: Central government employees and pensioners across the country are keeping a close watch on the news related to the upcoming 8th Pay Commission. This is expected to lead to a huge increase in salary and pension. According to a recent report by Ambit Capital, the new salary structure may increase the total remuneration by 30-34%, which will affect more than 1 crore employees and retired employees across the country. If implemented, this amendment may come into effect by 2026 or FY 2027, and this may put a heavy burden of Rs 1.8 lakh crore on the government treasury.
What is the detail
The current salary and pension structure is based on the Seventh Pay Commission, which came into effect in January 2016. A new commission is usually constituted every ten years to revise the pay structure taking into account cost of living, inflation and economic changes. The Eighth Pay Commission is expected to continue this tradition and offer revised pay scales for central government employees, including defence personnel and pensioners.
Fitment factor driving pay hike
One of the key components of the expected revision is the fitment factor—a multiplier used to determine the new basic salary. Ambit Capital estimates that the fitment factor for the Eighth Pay Commission could be between 1.83 and 2.46. This means that the current minimum wage of Rs 18,000 could rise to Rs 32,940 (at 1.83) or Rs 44,280 (at 2.46). For example, the current base salary of Rs 50,000 could rise to Rs 91,500 at the lower end of the fitment factor and Rs 1.23 lakh at the upper end. The revised framework is also expected to align dearness allowances more accurately with inflation and update pension payouts accordingly.
Boost consumption and economic growth
Experts believe that the new pay commission will act as a catalyst for economic growth, as increased salaries could lead to increased consumption, better access to healthcare, better housing and more spending on entertainment. The cascading effect of a salary hike on such a large employee base could have a profound impact on the retail, real estate and services sectors.
