Ever since the announcement of the 8th Pay Commission by the Modi government, discussions have been in full swing regarding the possible fitment factor. This factor is also very important because it is used to update the basic salary of central government employees.
About 1.2 crore central employees and pensioners are eagerly waiting for clarification on this, hoping that their salary and benefits will increase tremendously. So, if you are also a central employee or a pensioner, then this news means a lot to you.
The roadmap for the New 8th Pay Commission is now ready
According to a report by Financial Express, the central government is expected to release the terms of reference (ToR) of the 8th Pay Commission in the coming weeks. The chairman and other important members will be appointed only after the ToR is finalized. The process of recruitment for 40 posts for the new commission has also started, most of which will be filled through deputation.
The Finance Ministry has already issued two circulars last month. Employee unions are constantly demanding to increase the fitment factor. It will be interesting to see how much the government lives up to the expectations of the employees.
Strong demand from the employee union
Many employee organizations are demanding to fix the fitment factor at 2.86. If this happens, then there will be a tremendous increase in the basic salary and pension of the employees. However, given the potential financial burden, sources say that it may be challenging for the government to meet this demand. The real question is how much will the salary increase? Employees are eagerly waiting for a big change in their salary.
Know what the impact will be on your basic pay
Whether the fitment factor is 2.86 or 1.92, the impact is only on the basic pay. If the factor is set at 1.92, then the minimum basic pay can increase by about ₹ 34,560. 1. Whereas if it is 2.86, this figure will be even higher.
While this figure sounds encouraging, experts say that a large part of this increase will go towards offsetting the current dearness relief (DR) for pensioners and dearness allowance (DA) for employees. Hence, the net increase in the total take-home pay could be much less. Employees need to keep this aspect in mind as well.
Lessons from previous pay commissions
The 6th Pay Commission (2006) had a fitment factor of 1.86, resulting in a whopping 54% increase in pay. On the other hand, despite the 7th Pay Commission (2016) having a higher fitment factor of 2.57, the actual increase was only 14.2%, as a large part of it went towards DA/DR adjustment. The total cost of implementing this commission to the exchequer was ₹1.02 lakh crore. These figures show that employees do not get a big benefit just by having a higher fitment factor.
Big hike expectations
Although big hike expectations are high, many factors like inflation trends, budgetary constraints, and political considerations will determine the final fitment factor and the actual benefits that accrue from it.
The government will have to carefully consider all these aspects so that the employees benefit and the exchequer is not overburdened. Now it remains to be seen how the government strikes a balance between the expectations of the employees and the financial balance.