There is great news for central government employees and pensioners. The 8th Pay Commission may be formed soon, the announcement of which is eagerly awaited. Although it has not been officially confirmed yet, estimates of brokerage firms suggest that the salary of government employees can increase tremendously from 13% to 54%. If you are also a central employee, then this news can be very beneficial for you. Let us know in detail about the possible estimates of salary hike in the 8th Pay Commission and its impact.
Shocking estimates of the brokerage firm
According to a report of brokerage firm Ambit Capital dated July 9, the Fitment Factor can be between 1.83 and 2.46. According to this estimate, an increase of 14% to 54% in salary is possible. However, Ambit Capital itself believes that the chances of a 54% increase are very low. In such a situation, the estimate of an increase from 14% to 34% can be more accurate.
Factor of 1.82: Increase up to 14%
Factor of 2.15: Increase up to 34%
Factor of 2.46: Increase up to 54%
Mathematics of fitment factor and DA reset
Fitment factor is directly applicable to the basic pay. But, when the new pay commission is implemented, the dearness allowance (DA) is reset to zero, due to which the actual salary increase is slightly less.
For example, in 2016, the 7th Pay Commission suggested a factor of 2.57. This increased the minimum basic salary from ₹ 7,000 to ₹ 18,000. But after the DA reset, the actual increase was only 14.3%.
Why expect a bigger increase this time?
Currently, central employees get DA of 55% of the basic salary, which is much less than the level of 125% before the 7th Pay Commission. Experts believe that even though the fitment factor is less this time, the actual salary increase may be higher due to the DA factor.
Possible salary hike from the 8th Pay Commission
If the current salary of a government employee is ₹50,000 per month, then it can increase significantly when the 8th Pay Commission is implemented. But it will depend on what the government keeps the fitment factor.
Fitment factor salary hike Potential new salary (₹)
1.82 14% ₹57,000
2.15 34% ₹67,000
2.46 54% ₹77,000
Impact on the government budget and benefit to the economy
The implementation of the 8th Pay Commission will significantly increase the salary and pension bill of the central government. This may increase the pressure on the budget estimates for the financial year 2025-26. Experts believe that the burden of salary increase can be up to ₹ 1.5-2 lakh crore, which can affect infrastructure and capital expenditure.
On the other hand, this will also benefit the economy in a big way. The brokerage house says that the increase in salary will increase consumer demand, which will directly benefit the FMCG, automobile, consumer durables, and retail sectors. This is also expected to boost the stock market.
