8th Pay Commission Update: Central government employees and pensioners are now eagerly awaiting the implementation of the 8th Pay Commission. The government has already constituted the commission, whose members are conducting a review, but the report is expected to take some time.
The government has indicated that the review report is likely to take 16 to 18 months. However, before that, all eyes are on the Dearness Allowance (DA). The government increases the DA every six months. The DA directly impacts the employee’s current salary.
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Before the 8th Pay Commission is implemented, the DA could be increased several times, potentially leading to a significant jump in salaries. It is expected that the government might increase the DA to up to 70 per cent before implementing the 8th Pay Commission.
DA Calculation in Previous Commissions
Whenever the government implements a new pay commission, it reduces the existing DA and Dearness Relief (DR) to zero. The 5th Pay Commission was in effect from 1996 to 2006, and the DA had increased to 74 per cent. However, it was set to zero when the next pay commission was implemented.
The 6th Pay Commission was in effect from 2006 to 2016, and the DA reached 125 per cent of the basic pay, but it was also declared zero. The 7th Pay Commission is currently in effect. Unofficially, the term was until December 31, 2025. Currently, the DA for central government employees is 58 per cent. After the revision in March, it could be increased by 5 per cent to 63 per cent.
Bumper Salary Increase with the 8th Pay Commission
When the DA is reduced to zero upon the implementation of a new pay commission, the salary is increased based on a fitment factor. This can be understood with the example of 2016. In the 7th Pay Commission, the government provided a fitment factor of 2.57. This increased the minimum basic salary from Rs. 7000 to Rs. 18000, after the DA was reduced to zero. In-hand salaries increased by 14.3 per cent.
What could happen in the next pay commission?
Currently, the Dearness Allowance (DA) is between 58 and 63 per cent, which is significantly lower compared to previous commissions. There is a strong possibility that it will be merged with the basic salary in the 8th Pay Commission. Along with this, the percentage increase in employees’ actual salaries is likely to be much higher and more impactful than the last time.
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This is why the inclusion of DA means that when the new pay commission is implemented, the increase in basic pay could significantly boost the total take-home salary.