The Central Government announced the 8th Pay Commission in January 2025. It is expected to benefit more than 1 crore central employees and pensioners across the country. However, the Terms of Reference (ToR) and the appointment of the chairperson and members of the commission are still pending.
When Will the 8th Pay Commission Be Implemented?
According to a report by Ambit Institutional Equities, the 8th Pay Commission may give its recommendations by the end of 2025. It is likely to be implemented from January 2026. However, the final decision will be made only after the report is submitted and approved by the government. The report also says that if the commission’s recommendations are applied from FY27, the salary and pension of government employees could increase by 30 to 34 percent.
What Could Be the Fitment Factor?
The 8th Pay Commission has not been officially formed yet. But market experts believe the fitment factor this time may be between 1.83 and 2.46.
The fitment factor is a number used to calculate the new basic salary from the old one.
How Does the Fitment Factor Work?
Suppose an employee’s current basic salary is ₹18,000.
If the fitment factor is 2.0, the new salary becomes:
₹18,000 × 2.0 = ₹36,000
This does not include other benefits like:
- Dearness Allowance (DA)
- House Rent Allowance (HRA)
- These will further increase the take-home salary.
When Will the Commission Start Its Work?
Once the government finalises the structure and terms of reference of the commission, the report is expected by the end of 2025. After that, the new pay scale may be applied from FY27, once the Cabinet approves.
How Will This Benefit the Economy?
This move will not only increase the income of central employees, but it may also give a boost to the demand-driven economy, as more income means more spending power.