8th Pay Commission : The Central Government has taken a major step towards the formation of the 8th Pay Commission by approving its Terms of Reference (TOR). The government has also appointed former Supreme Court judge Justice Ranjana Prakash Desai as the Commission’s Chairperson.
The Commission will now prepare its report, which will be submitted to the government within the next 18 months. The report will be sent to the Union Cabinet for approval. Only after Cabinet approval are the Commission’s recommendations implemented, and the ‘Fitment Factor’, which forms the basis for revision of salaries and pensions of employees and pensioners, is determined.
What is fitment factor and how is it decided?
The fitment factor in the 7th Pay Commission was set at 2.57. The 8th Pay Commission’s fitment factor has not yet been determined. According to Manjeet Singh Patel, national president of the All India NPS Employees Federation, an employee’s basic pay under the old Pay Commission is multiplied by the new commission’s fitment factor. This determines their new basic salary.
Example:
If the current basic pay of an employee is ₹35,000 and the new fitment factor is fixed at 2.11, then the new basic pay will be – ₹35,000 × 2.11 = ₹73,850.
Ramachandran Krishnamurthy, director of Nexdigm, explains that when basic salary increases, other related allowances, such as house rent allowance (HRA), automatically increase because they are a percentage of basic salary. However, fixed allowances, such as transport allowance, are usually revised every few months.
Is DA related to fitment factor?
According to Patel, DA isn’t directly related to the fitment factor, but it’s an important indicator. For example, if the current DA is 58% and increases to 70% when the 8th Pay Commission recommendations are implemented, the government adds a growth factor, which was 24% last time. Family units are also taken into account; the number of family units, which was 3 last time, can be considered 4 this time. This results in an additional increase of approximately 13% in the fitment factor. Thus, the fitment factor is a combination of several factors: the DA rate, inflation rate, family units, and the growth factor.
Will the salary double?
Patel says the fitment factor directly impacts basic salary and HRA. However, since DA starts at zero (0%) when the new pay commission is implemented, overall employee salaries may increase by 20-25%, not double.
Will the fitment factor be the same for all employees?
Krishnamurthy explains that the 7th Pay Commission applied a uniform fitment factor of 2.57 to all employees. The 8th Pay Commission may also adopt this policy for simplicity. However, according to Patel, the fitment factor for lower-level employees may be slightly higher to reduce pay disparity, while it may be slightly lower for higher-level employees. The commission may also suggest merging some pay levels to simplify the pay matrix. Currently, there are 18 pay scales for central government employees.
What will happen if the fitment factor becomes 2.0?
If an employee’s basic pay is ₹50,000 and the 8th Pay Commission sets a fitment factor of 2.0, the new basic salary will be ₹50,000 × 2.0 = ₹100,000. DA, HRA, and other allowances will then be re-fixed based on this new basic pay.
What will be the impact on pensioners?
Krishnamurthy explains that central pensioners will also benefit in the same proportion. If the fitment factor is 2.0, the new pension for a person receiving a pension of ₹30,000 will increase to approximately ₹60,000, subject to final approval from the Cabinet.
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
Add businessleague.in as a Preferred Source
