Centre approves setting up of 8th Pay Commission for government employees, pensioners

The Central government will set up a committee for the implementation of the 8th Pay Commission for government employees and pensioners, potentially benefiting millions of individuals. The 7th Pay Commission's recommendations, which were implemented by the Narendra Modi-led government in January 2016, would conclude on December 31, 2025.

According to the timeline provided, the 8th Pay Commission will come into force on January 1, 2026. Similar to past commissions, this is expected to lead to updates in salaries, including modifications to Dearness Allowance (DA) and Dearness Relief (DR) for retirees.

Central government employees and pensioners have been eagerly anticipating the establishment of the commission in order to facilitate the revision of their basic pay, allowances, pension, and other benefits.

Over 50 lakh central government employees will benefit as they would see revision of their basic pay, allowances, pension, and other benefits.  Approximately 65 lakh pensioners, including those from the defense sector, will also witness an increase in their pensions. Furthermore, around 4 lakh employees in Delhi, including those from the defense and Delhi government sectors, will reap the benefits of this initiative. 

During the announcement, Union Minister Ashwini Vaishnaw indicated that the commission is expected to be established by 2026.

Employees, pensioners, and trade unions have been eagerly awaiting the announcement of the 8th Pay Commission by the Central government. They have been hopeful for significant developments to be revealed in the upcoming Union Budget presentation next week.

Government employees at both the central and state levels have been eagerly looking forward to the establishment of the 8th pay commission. Recent reports indicate that there is a possibility of increasing the fitment factor from 2.57 to 2.86, which would have a significant impact on employees' basic salaries.

For instance, if the fitment factor is adjusted to 2.86, the current minimum basic salary of Rs 18,000 could potentially rise to Rs 51,480. The fitment factor plays a critical role in determining the revised basic salary and pension of government employees and retirees.

6th Pay Commission vs 7th Pay Commission

Central Pay Commissions are set up at 10-year intervals to examine and suggest alterations to the salary structures, allowances, and perks of central government staff. These commissions consider aspects such as inflation and economic circumstances.

The report of the 7th Pay Commission was submitted on November 19, 2015, and the recommendations were put into effect from January 1, 2016, after being constituted by former Prime Minister Manmohan Singh on February 28, 2014.

Prior to this, the 4th, 5th, and 6th Pay Commissions all had 10-year terms.

The transition from the 6th to the 7th Pay Commission represented a significant advancement in the salary structure for government employees. The implementation of a fitment factor of 2.57 under the 7th Pay Commission resulted in the multiplication of the basic pay of central government employees and pensioners by 2.57, equating to a 2.57% increase in their basic salary.

The 7th pay commission saw an expenditure increase of Rs 1 lakh crore for FY 2016-17.

This was a notable increase compared to the 1.86% rise in basic pay experienced by government employees under the preceding pay commission, which had a fitment factor of 1.86.

7th Pay Commission
Year of Implementation: 2016
Minimum Monthly Pay: Rs 18,000
Maximum Monthly Pay: Rs 2.5 lakh (for Cabinet Secretary)
Pay Structure: Replaced pay bands and grade pay with a simplified pay matrix
Fitment Factor: 2.57 times the basic pay
Allowances: Further rationalised, with restructuring of HRA and other allowances
Gratuity Ceiling: Rs 20 lakh, with provision for periodic increase based on DA

6th Pay Commission

Implementation Year: 2006
Pay Bands & Grade Pay: Introduced the pay bands and grade pay system
Minimum Pay: Rs 7,000 per month
Maximum Pay: Rs 80,000 per month (for Secretary level)
Fitment Factor: Approximately 1.86 times the basic pay
Allowances: Rationalized, with a significant focus on HRA and other perks
Gratuity Ceiling: Rs 10 lakh
Pension: Revised with an option for additional pension post-retirement age
Dearness Allowance (DA): Introduced based on inflation index.