The salaries of central government employees may rise by up to Rs 19,000 per month if the 8th Pay Commission is implemented, Goldman Sachs has said. Around 50 lakh central government employees and 65 lakh pensioners will benefit from the pay revision.
What Is Pay Commission?
Pay Commission is a government-appointed body that reviews and recommends salary, pension, and benefits revisions for central government employees and pensioners in India. It is set up periodically (usually every 10 years) to revise pay scales based on economic conditions, inflation, and cost of living.
Estimated Salary Increase
Currently, a mid-level government employee earns an average of Rs 1 lakh per month (pre-tax). Based on different budget allocations, the expected salary increase could be:
- With Rs 1.75 lakh crore allocation – Salary may rise to Rs 1,14,600 per month.
- With Rs 2 lakh crore allocation – Salary may grow to Rs 1,16,700 per month.
- With a Rs 2.25 lakh crore allocation – Salary may increase to Rs 1,18,800 per month.
When Will The Pay Hike Take Effect?
While there has been no official announcement about the formation of the 8th Pay Commission, experts believe the government may constitute the panel in April 2025, with its recommendations coming into effect by 2026 or 2027.
How It’s Different From The 7th Pay Commission
The 7th Pay Commission was implemented in 2016, costing the government Rs 1.02 lakh crore. It revised salaries and pensions rolled out from July 2016, though implemented retrospectively from January 2016. The financial impact was absorbed in FY 2016-17.
The fitment factor (used to calculate salary hikes) was increased by 2.57 times, raising the minimum basic salary from Rs 7,000 to Rs 18,000.
Similarly, if the 8th Pay Commission increases the fitment factor to 3 or more, government employees can expect a substantial salary hike.
Once formed, the 8th Pay Commission will consult employee unions and other stakeholders to decide the fitment factor and salary revisions. Unions are expected to demand a fitment factor of 2.57 or higher, similar to the 7th Pay Commission.
Former Finance Secretary Subhash Chandra Garg suggested in January that this might be unrealistic, predicting a fitment factor closer to 1.92.
