8th Pay Commission: There are great expectations for central government employees and pensioners in the coming months. The Eighth Pay Commission has started its work. People’s attention is especially on how much their fitment factor will be. This small word sounds small, but on its basis the amount of increase in salary and pension is decided. Many previous pay commissions have made a big difference in the income of employees, so this time too everyone has high expectations.
After the approval of the Term of Reference (ToR) of the 8th Pay Commission, the Commission has started its formal preparations. The team led by Commission Chairperson Justice (Retd) Ranjana Desai will now decide how much salary, pension and allowances should be increased. Whatever recommendations will be given by the Commission, they will be considered final only after the approval of the Union Cabinet.
What is fitment factor?
Fitment factor is a coefficient (multiplier) with the help of which the new basic pay is calculated from the old pay structure. While deciding this, many things are kept in mind – like inflation rate, cost of living index and Dr. Wallace R. Aykroyd’s formula (Dr. Wallace R. Aykroyd’s formula). This formula is basically decided on the basis of minimum needs of a laborer and his family like food, clothing and housing expenses. The 7th Pay Commission had fixed it at 2.57.
How much can be the fitment factor?
The expectations of the employees regarding the Eighth Pay Commission are based on several reports. Staff-side members of NC-JCM (National Council-JCM) had told a news channel that they feel that this time also the fitment factor may be similar to the Seventh Pay Commission. At the same time, in a report by Ambit Capital in July, it was estimated that it could be between 1.83 to 2.46. The report also said, according to back-of-the-envelope calculations, the range in which the government can fix the fitment factor based on the increase given in the last pay commission is between 1.83 to 2.46.
If Ambit Capital is to be believed, there could be a big change in the minimum wage. At present the minimum salary of central government employees is Rs 18,000. If the fitment factor is 1.83, then it will be around Rs 32,940. If it is 2.46, the same salary can increase to Rs 44,280. That means the salary increase will largely depend on this single number.
Maximum increase possible up to 54 percent
The Commission’s decision will have a direct impact on the income of more than 50 lakh employees and more than 65 lakh pensioners. Ambit Capital estimated in its report that this pay commission could lead to an actual salary increase of 14 percent to a maximum of 54 percent, which includes both basic pay and DA. However, he has also said that a big increase like 54 percent seems difficult, because the financial burden on the government can increase a lot. Some experts believe that the government can increase the increase slightly to increase consumption, but practical limits will also have to be seen.
Salary estimation on different fitment
To make it easier for employees to estimate, possible salaries as per fitment factor of 1.92 and 2.57 at different grade pay have also been presented as examples. It also includes things like HRA, TA, NPS and CGHS.
It is important to note that HRA is considered to be 24 percent of the basic salary (for X-category cities). TA ranges from Rs 3,600 to Rs 7,200 depending on the level. NPS is 10 percent of basic, and CGHS is taken at current rates only.
For Grade Pay 1900:
At 1.92 fitment factor:
Basic: ₹54,528 | HRA: ₹13,086 | TA: ₹3,600
Gross: ₹71,215 | NPS: ₹5,453 | CGHS: ₹250
Net: ₹65,512
At 2.57 fitment factor:
Basic: ₹72,988 | HRA: ₹17,517
Gross: ₹94,105 | NPS: ₹7,299
Net: ₹86,556
For Grade Pay 2400:
At 1.92 fitment factor: Basic: ₹73,152 | Net: ₹86,743
At 2.57 fitment factor: Basic: ₹97,917 | Net: ₹1,14,975
For Grade Pay 4600:
At 1.92: Basic: ₹1,12,512 | Net: ₹1,31,213
At 2.57: Basic: ₹1,50,602 | Net: ₹1,74,636
For Grade Pay 7600:
At 1.92: Basic: ₹1,53,984 | Net: ₹1,82,092
At 2.57: Basic: ₹2,06,114 | Net: ₹2,41,519
For Grade Pay 8900:
At 1.92: Basic: ₹1,85,472 | Net: ₹2,17,988
At 2.57: Basic: ₹2,48,262 | Net: ₹2,89,569
The purpose of all these estimates is to give employees an idea of what their potential earnings could be based on different fitment factors. The real decision will come out only after the recommendations of the Eighth Pay Commission and the approval of the government.
