8th Pay Commission: The government has clarified that DA-DR will not be added to the basic salary. This makes the role of the 8th Pay Commission even more important. Will this change the entire game of employee salary increases? Learn about its direct impact and future outlook.
8th Pay Commission: Union Minister of State for Finance Pankaj Chaudhary announced on Monday that the government has officially notified the formation of the 8th Central Pay Commission. He also clarified that there is currently no proposal to integrate dearness allowance (DA) or dearness relief (DR) into basic pay. DA/DR rates are revised every six months based on the AICPI-IW index to account for inflation.
Previously, it was speculated that DA and DR might not be increased after 2026 and that they might be merged into the 8th Pay Commission. However, the government’s statement now clearly states that employees and pensioners will continue to receive dearness allowance as before. It will also continue to increase every six months based on the AICPI-IW index.
What this means for government employees
The government has clarified that DA and DR will not be added to the basic pay for now. This means that employees’ salaries will continue to operate under the current structure, meaning the basic pay will remain the same, and only DA/DR will increase slightly every six months.
However, when DA is not added to the basic pay, there is no real salary increase. Because many important factors, such as pension, PF, and HRA, depend on the basic pay, the 8th Pay Commission’s importance increases further. The actual and significant salary increase will now be based on the Commission’s recommendations, not by adding DA to the basic pay.
Current Status of DA-DR
Currently, the DA/DR rate for central employees and pensioners is 55%. Before Diwali, the government increased it by 3%. DA is given to employees, while DR is given to pensioners. The recommendations of the 8th Pay Commission will directly impact more than 5 million employees and 6.5 million pensioners.
When will the 8th Pay Commission be implemented?
The government announced the 8th Pay Commission in January this year, as the 7th Pay Commission is completing its 10-year term. The commission, headed by Justice (Retd.) Ranjan Desai, is expected to submit its recommendations within 18 months.
Theoretically, 2026 is the year the new pay scale will be implemented. However, reports suggest that due to delays in appointments, ambiguity in the ToR, and lengthy procedures, implementation could be delayed by at least two years.
Objections to the ToR
Employee unions say the Commission’s Terms of Reference excludes 6.9 million pensioners. Furthermore, the date of implementation of the new pay scale is not mentioned. Previous pay commissions clearly provided this information. Unions have demanded revisions to the ToR, but the government has not yet commented.
Fitment Factor: What to Expect?
NC-JCM representatives say the fitment factor recommendations could be similar to those of the 7th Pay Commission. Ambit Capital’s report assumes a fitment factor in the range of 1.83 to 2.46.
If this happens, the minimum wage could increase from ₹18,000 to between ₹32,940 and ₹44,280.
- 1.83 factor → approximately ₹32,940
- 2.46 factor → approximately ₹44,280
The 8th Pay Commission will bring changes to salaries, pensions, and allowances. This will directly benefit millions of people.
How Much Could Salary Increase?
According to Ambit’s report, the total actual salary (Basic + DA) could increase by 14% to 54%. However, a significant increase like 54% is unlikely, as it would impose a significant financial burden on the government. The report also suggests that the government could use wage increases as a means to boost consumption.
Projections for Different Pay Grades
Projections for potential pay increases have been released for several pay grades, such as 1900, 2400, 4600, 7600, and 8900, assuming a fitment factor of 1.92 and 2.57. These include HRA (24%), TA (₹3,600–₹7,200), NPS (10% of basic), and existing CGHS charges.
