Big news for government employees of India. The Pay Commission is a government entity that assesses and recommends changes to salaries, pensions, and benefits for central government workers and retirees across the nation. Typically, it provides its recommendations every decade, considering factors like the economy, inflation, and living costs.
Currently, the 7th Pay Commission is in effect, and the government has approved the establishment of the 8th Pay Commission as of January this year. Once the 8th Pay Commission is implemented, there are high hopes for a significant salary boost for central government employees. It’s worth noting that around 5 million central government employees and 6.5 million pensioners will benefit from this new commission.
The salary hikes will depend on the budget allocation. For instance, estimates suggest that a government employee earning Rs 1 lakh per month might see variations in their salary based on the new budget.
According to report, the investment bank conducted an in-depth analysis of central government employees, who currently have an average monthly salary of Rs 1 lakh. While this analysis serves as an example, it indicates that an employee with a salary of Rs 1 lakh could potentially receive additional benefits ranging from Rs 14,000 to Rs 19,000 per month.
How salary increases relate to the budget
The report indicates that if the government sets aside a budget of 1.75 lakh crores, employees currently earning Rs 1 lakh per month could see their salaries rise to Rs 1,14,600. If the budget reaches Rs 2 lakh crores, the salary might go up to Rs 1,16,700, and with a budget of Rs 2.25 lakh crores, it could increase to Rs 1,18,800.
The report also mentions that the panel for the 8th Pay Commission is expected to be established in April 2025, with its recommendations likely to be put into action by 2026 or 2027. In the previous 7th Pay Commission, which was implemented in 2016, the fitment factor (used to determine salary increases) was raised by 2.57 times, boosting the minimum basic salary from Rs 7,000 to Rs 18,000.
Additionally, the 8th Pay Commission will engage with employee unions and other relevant parties to determine the fitment factor.