The Central government has announced to set up the 8th Pay Commission to revise the salaries of central government employees and pensioners after its approval by the Cabinet on Thursday, presided over by Prime Minister Narendra Modi.
Union Minister Ashwini Vaishnaw announced the decision on Thursday at New Delhi but the date for setting up the commission was not announced by the minister.
This development comes just ahead of the Union Budget 2025 and is expected to bring a salary hike for government employees and retirees.
Reports suggest a possible increase in the fitment factor from 2.57 to 2.86, a key parameter in calculating revised salaries. If implemented, this change could result in a rise in the basic salaries of government employees. The fitment factor determines how much the basic pay is multiplied to calculate revised salaries and pensions.
The salary structure for government employees has seen significant changes under previous pay commissions. The 7th Pay Commission, implemented in 2016, introduced a simplified pay matrix replacing the older pay bands and grade pay system.
It set the minimum monthly pay at Rs 18,000 and the maximum at Rs 2.5 lakh for Cabinet Secretaries, with a fitment factor of 2.57 times the basic pay. It also increased the gratuity ceiling to Rs 20 lakh and rationalized allowances like HRA.
The approval of the 8th Pay Commission is likely to have a positive impact on millions of government employees and pensioners. The expected salary hike will increase their disposable income, potentially boosting consumer spending ahead of Budget 2025.
It is ironic that benefits of previous pay commission are still hanging on the sword of uncertainty. The hope for some upsides of the new pay scale seems illusion.