8th Pay Commission: Last week, the central government approved a 2% hike in the dearness allowance (DA) for its employees. This means the DA will rise from 53% to 55%. The DA is adjusted every six months, which also affects other salary components like House Rent Allowance (HRA) and Travel Allowance (TA).

 

Central government employees will receive the updated dearness allowance as arrears for January and February 2025. The new DA will take effect with the salary for March 2025.

 

When is the next DA update scheduled?

 

The next adjustment for the dearness allowance is set for November 2025, which will be applicable from July 2025. This will be the final DA update under the 7th Pay Commission, as the government plans to introduce the 8th Pay Commission starting January 2026. The DA is crucial for mitigating the effects of inflation on salaries.

 

PM Modi has given the green light for the 8th Pay Commission.

Union Minister Ashwini Vaishnaw announced in January that Prime Minister Narendra Modi has approved the establishment of the 8th Pay Commission. However, the Union Budget 2025-26 did not specify the costs associated with the 8th Pay Commission.

 

What is the Fitment Factor?

 

The fitment factor is a multiplier that determines the revised basic salary for central government employees and pensioners. The 7th Pay Commission suggested a fitment factor of 2.57 for all employees, while the 6th Pay Commission had a factor of about 1.86. Experts anticipate that the 8th Pay Commission might propose a fitment factor ranging from 2.28 to 2.86, potentially boosting employees’ basic salaries by 40-50%. It’s important to note that the fitment factor applies to the basic salary, not the gross salary.

 

What will be the salary increase for central employees under the 8th Pay Commission?

 

A recent report indicates that experts anticipate a substantial rise in the basic salary of government employees with the 8th Pay Commission, primarily due to an increase in the fitment factor. Neeti Sharma, CEO of TeamLease Digital, predicts that the basic salary could rise by 25-30 percent, with pensions likely seeing a similar increase.

 

Sharma noted, “The expected minimum basic salary is projected to exceed Rs 40,000, and there may also be enhancements in perks, allowances, and performance-related pay.”

 

Dr. Vishal Sarin, a professor and Assistant Dean at LPU, mentioned that the 8th Pay Commission is expected to introduce significant changes to the salaries of central government employees, estimating the fitment factor to range between 2.28 and 2.86. This could potentially boost employees’ basic salaries by 40-50 percent.

 

For instance, an employee currently earning a basic salary of Rs 20,000 might see their salary rise to between Rs 46,600 and Rs 57,200.

 

How will the Dearness Allowance (DA) be determined in the 8th Pay Commission?

 

Currently, the government has not specified how the dearness allowance will be calculated starting January 1, 2026. It has traditionally been based on the All India Consumer Price Index for Industrial Workers (AICPI-IW). It will be interesting to see if there are any changes to the DA calculation formula in the upcoming 8th Pay Commission.

 

Fitment Factor Calculator for the 8th Pay Commission

 

If the 8th Pay Commission recommends a fitment factor of 2.86, the basic salary for government employees would rise from Rs 18,000 to Rs 51,480, calculated using the formula: 2.86 x current basic salary. Additionally, with a fitment factor of 2.86, the minimum pension would increase from Rs 9,000 to Rs 36,000.

 

This news is encouraging for government employees, as it will directly affect their salaries and help alleviate the impact of inflation.