Discussions are actively taking place about the 8th Pay Commission and the potential increase in dearness allowance for the upcoming year 2025. Historically, a new pay commission has been established every decade. The 7th Pay Commission was set up in February 2014, with its recommendations taking effect from January 1, 2016, and this period will conclude on December 31, 2025.
Given this timeline, there are speculations that the central government might introduce the 8th Pay Commission in the budget for 2025-26, which is expected to be presented in February or shortly thereafter, with implementation possibly starting in January 2026. However, this has not yet been officially confirmed. If the 8th Pay Commission is approved, it could raise the minimum salary for employees to 34,000 and pensions to 17,000, representing a significant 186 percent increase in salaries.
Numerous employee organizations have already submitted proposals. Recently, central trade unions and the Bharatiya Mazdoor Sangh met with Finance Minister Sitharaman to advocate for the establishment of the 8th Pay Commission, which would impact around 5 million government employees and 6.7 million pensioners. Last month, the National Council (employee side) of the Joint Consultative Machinery (NC-JCM) also reached out to the Union Cabinet Secretary, urging for the prompt formation of a new Pay Commission. They highlighted that over nine years have passed since the 7th Pay Commission’s recommendations were enacted, and the next salary and pension adjustments are due from January 1, 2026.
Earlier, during the monsoon session, Rajya Sabha MPs Ramjilal Suman and Javed Ali Khan raised this issue, to which Minister of State for Finance Pankaj Chaudhary responded that there is currently no proposal under consideration by the Central Government for the 8th Pay Commission, with only two representations received so far.
What impact will the 8th Pay Commission have on the fitment factor?
According to media reports, the implementation of the 8th Pay Commission may lead to an increase in the fitment factor. Central employees have long been advocating for a rise in the fitment factor to 3.68. Therefore, it is anticipated that the Modi government might raise the fitment factor from the current 2.57 to around 2.86%.
Currently, the fitment factor for central employees stands at 2.57, with a basic salary of 18,000. Under the 7th Pay Commission, a central employee’s basic salary is set at Rs 20,000, resulting in a salary of Rs 51,400 when calculated as 20,000 x 2.57. If the fitment factor is adjusted to 2.86 in the 8th Pay Commission, the same salary would increase to Rs 57,200 (20,000 x 2.86). Additionally, pensions could rise significantly from Rs 9,000 to Rs 25,740.
