The most talked about topic among government employees these days is the 8th Pay Commission. Last month, the government released its Terms of Reference (TOR). This has further increased the curiosity about how much the salary will be increased and where the fitment factor will be fixed. This factor will determine the new basic pay.
What is the fitment factor?
In simple terms, the fitment factor is a multiplier that is used to convert the old basic pay into the new pay. During the 7th Pay Commission, it was fixed at 2.57. This means that the new basic pay was fixed by multiplying the old basic pay by 2.57. Now, the biggest question is what will happen under the 8th Pay Commission.
How is the fitment factor determined?
Many factors are considered while determining the fitment factor. All these factors include inflation, cost of living and basic needs of the family. The process also includes the formula of Dr. Wallace R. Ackroyd, which takes into account food, clothing, rent and general expenses.
How much will the fitment factor increase?
According to a report by financial firm Ambit Capital, the fitment factor could be in the range of 1.83 to 2.46. If this happens, the minimum basic pay of Rs 18,000 will increase as follows:
- At 1.83 factor: around Rs 32,940
- At 2.46 factor: around Rs 44,280
This means that the minimum pay could increase by 14% to 54%. However, a 54% increase is considered unlikely as it would put a huge financial burden on the government.
What could be the new pay for different grade pay?
The fitment factor is expected to be in the range of 1.92 to 2.57 in the 8th Pay Commission and based on this, there could be significant changes in the pay of different grade pay. This would include basic pay, HRA, TA, NPS and CGHS.
When will these benefits be available?
The Eighth Pay Commission, headed by Justice (Retd) Ranjana Desai, is expected to submit its report within the next one and a half years or about 18 months. The report will include recommendations related to the salary, basic pay, fitment factor and other pay scales of employees. After the cabinet approval, the changes in salary, pension and allowances will be implemented. About 50 lakh employees and 65 lakh pensioners will benefit from these changes.
