8th Pay Commission: The central government approved the 8th Pay Commission in January 2025. Since then government employees and pensioners are waiting for the formation of the Pay Commission. Now a big report has come on this. The reputed investment bank Goldman Sachs has told in one of its reports that when can the 8th Pay Commission be formed and how much can be the salary increase of the employees.
By when can the Pay Commission be formed?
Goldman Sachs said in a note that the 8th Pay Commission may be constituted in April 2025. Its recommendations are likely to be implemented by 2026 or 2027. Many reports have also expressed the possibility that the 8th Pay Commission may be constituted in April 2025.
How much can be the salary hike?
Goldman Sachs has given three possible scenarios for the salary hike of central employees. These are based on how much money the government can allocate for increasing salary and pension.
Allocation of ₹1.75 lakh crore: If the government budgets ₹1.75 lakh crore for implementing the 8th Pay Commission and uses 50-50% of it for salary and pension hikes, the average salary could increase by ₹14,600 per month.
Allocation of ₹2 lakh crore: If ₹2 lakh crore is allocated, the average salary hike will be ₹16,700 per month.
Allocation of ₹2.25 lakh crore: If the central government allocates ₹2.25 lakh crore, employees can get a salary hike of ₹18,800 per month.
50 lakh employees and 65 lakh pensioners will benefit
According to Goldman Sachs, the average salary of central government employees is currently ₹1 lakh per month (before tax). This salary hike will directly benefit 50 lakh government employees and 65 lakh pensioners. Under the 7th Pay Commission, the central government had spent ₹1.02 lakh crore for salary and pension hike. According to a report by Goldman Sachs, the average monthly salary of central government employees may increase by ₹14,000-₹19,000 after the implementation of the 8th Pay Commission. This will be 14-19% of their current average monthly salary of ₹1 lakh (before tax).
What has happened on the 8th Pay Commission so far?
The Union Cabinet has approved the 8th Pay Commission on 16 January 2025. However, the members, chairman and scope of work of the commission (Terms of Reference – ToR) have not been decided yet. Once decided, the commission will hold discussions with all the concerned parties. It will then finalise the fitment factor and other aspects of the salary-pension hike.
What can be the fitment factor?
According to reports, the National Council-Joint Consultative Machinery (NC-JCM) has demanded a fitment factor of 2.57 or more, which is equal to the 7th Pay Commission. NC-JCM is a forum for resolving disputes between the central government and employees. Earlier, a fitment factor of 2.86 was also demanded. However, India’s former finance secretary Subhash Garg had described it as ‘like asking for the moon’ i.e. impossible in an interview to a news channel. According to him, ‘the fitment factor can be around 1.92.’ Increase in minimum wages and pension as per fitment factor. If the fitment factor of 2.57 is implemented, then central employees and pensioners will get the benefit of 157% hike.
1. Minimum Wage: Will increase from ₹18,000 to ₹46,260.
2. Minimum Pension: Will increase from ₹9,000 to ₹23,130 (157% increase).
3. When 1.92 fitment factor is applied
4. If the fitment factor of 1.92 is implemented, central employees and pensioners will get the benefit of 92% hike.
5. Minimum wage: Will increase from ₹18,000 to ₹34,560.
6. Minimum pension: Will increase from ₹9,000 to ₹17,280.
7. Impact on government expenditure and economy
The implementation of the 8th Pay Commission may lead to a huge increase in government expenditure and will also put a strain on the Indian economy. Keeping its effects in mind, the government will do a comprehensive review before taking any final decision.