How much was the salary and pension of central employees increased in the 7th Pay Commission? – Read

Union Minister Ashwini Vaishnav said on January 16, 2025 that the Union Cabinet has approved the formation of the 8th Pay Commission to revise the salaries of more than 50 lakh central government employees. This announcement has been made a few days before the Union Budget of 2025. With the implementation of the Commission’s recommendations, along with the salary revision, Dearness Allowance (DA) will also be affected. Vaishnav said that the commission is likely to be constituted soon and its recommendations will come into effect on January 1, 2026.

Before the recommendations of the 8th Pay Commission come out, let us understand how much benefit the central employees had received under the 7th and 6th Pay Commission. The recommendations of the 7th Pay Commission were implemented in the year 2016. The recommendations of the 6th Pay Commission were implemented 10 years ago in 2006. Let us also tell you how much benefit the central employees and pensioners got under the 7th and 6th Pay Commission.

8th Pay Commission salary increase

Complete information about how much salary will increase under the 8th Pay Commission is not yet known. However, at this stage it would be speculative to say how much increase in salary the Central Government employees will get. The most important aspect of Pay Commission is the fitment factor. This is the key multiplier used to determine the revised salary and pension, which will play a key role in the hike.

We are all proud of the efforts of all Government employees, who work to build a Viksit Bharat. The Cabinet’s decision on the 8th Pay Commission will improve quality of life and give a boost to consumption. https://t.co/4DCa5skxNG

— Narendra Modi (@narendramodi) January 16, 2025

What is fitment factor?

Fitment factor is used to calculate the revised basic salary and basic pension for government employees. It acts as an important component of the Pay Commission recommendations. The revised basic salary is determined by multiplying the existing basic salary by the fitment factor.

Increase in salary and pension in 7th Pay Commission

The fitment factor of the 7th Pay Commission was 2.57, which means that the basic salary of central government employees and pensioners will be multiplied by 2.57. The 7th Pay Commission introduced important changes for central government employees and pensioners. It recommended a minimum basic pay of Rs 18,000, which is significantly higher than the previous Rs 7,000. To revise the salaries, a fitment factor of 2.57 was applied, resulting in uniform increase across all salary levels.

The Commission conducted a comprehensive review of the salary structure, allowances and pension considering various aspects of employee compensation. Additionally, it introduced a health insurance scheme for both employees and pensioners, thereby increasing financial security for medical expenses. For pensioners who retired before January 1, 2016, the pension formulation was also revised to ensure equal adjustment. Currently, the minimum basic pension under the 7th Pay Commission is Rs 9,000, which was increased from Rs 3,500 in the Sixth Pay Commission.

Increase in salary and pension in 6th Pay Commission

Under the Sixth Pay Commission, the basic salary of central government employees and pensioners was increased by 1.86 percent. The reason for this was that the fitment factor was 1.86. In this Pay Commission, the minimum basic salary was recommended at Rs 7,000, which was Rs 2,750 in the 5th Pay Commission. The fitment factor, initially proposed at 1.74, was later increased to 1.86 by the government.

The revised salary was made effective from 1 January 2006, while the allowances came into effect from 1 September 2008. Additionally, the Commission increased the cost of Cost of Living Allowance from 16 percent to 22 percent in view of inflation and to enhance financial well-being. Under the Sixth Pay Commission, the minimum basic pension for central government pensioners was increased from Rs 1,275 to Rs 3,500 per month.

How to calculate salary from fitment factor?

Let us try to understand this with an example how central government employees can calculate the salary increment based on the fitment factor declared by the 8th Pay Commission. Suppose your basic salary is currently Rs 40,000 per month and the 8th Pay Commission has recommended a fitment factor of 2.5. Based on that, your revised basic salary will increase to Rs 1 lakh per month.

Here is the complete calculation

Existing basic salary: Rs 40,000 per month

8th Pay Commission Fitment Factor (Notional): 2.5

Revised Basic Salary: Rs 40,000 × 2.5 = Rs 1,00,000 per month

The actual fitment factor will be announced when the 8th Pay Commission releases its recommendations. This decision will significantly increase the finances of central government employees. Due to which consumption will increase and economic activities are expected to increase.