The 8th Pay Commission for central government employees and pensioners is expected to be implemented soon. This will benefit approximately 11.2 million people. A 30 to 34 percent increase in salaries and pensions is possible. This increase will increase the spending capacity of millions of families and reinvigorate market demand.
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8th Pay Commission: There are hopes that the country’s economy will once again gain momentum through a salary boost. The 8th Pay Commission, for central government employees and pensioners, is not just a salary increase, but could prove to be a step that will revitalize the spending power of millions of families and reinvigorate market demand. Economists believe that if the proposed recommendations are implemented, their impact will be directly reflected in income, savings, and consumer spending.
Who will benefit and how big will the impact be?
The 8th Pay Commission is expected to benefit approximately 11.2 million central government employees and pensioners. This new commission will replace the 7th Pay Commission, which has been in effect since 2016. The proposed changes will redefine basic salaries, allowances, and pension structures. According to Ambit Institutional Equities, the impact of this revision could be so significant that it could affect approximately 15.5% of total government expenditure.
What will be different this time from the 7th Pay Commission?
Under the 7th Pay Commission, the average salary increase, excluding allowances, was only 14%. Although the fitment factor was set at 2.57, the actual increase was limited due to the dearness allowance (DA) being zeroed at the time of implementation of the commission. It should be noted that expectations are much higher this time. According to reports, a 30% to 34% increase in salary and pension is possible, which would be much higher than the previous revision.
Fitment Factor and Potential Salary Increases
The Ambit report states that the government may consider various options. The potential fitment factor could be between 1.83 and 2.46. For example, if an employee’s current basic salary is Rs 50,000 and DA increases to 60% by the end of 2025, a salary hike of at least 14% is considered possible under the new pay commission, albeit at a lower level.
