8th Pay Commission expected salary calculation: The Central Government is yet to notify the Terms of Reference (ToR) and members of the 8th Central Pay Commission (CPC)
While the is likely to be released soon, finance experts have calculated the projected salary hikes employees can expect from the new pay panel.
As per experts at , a financial services company, the 8th CPC is expected to increase employee salaries by a fitment factor ranging from 1.82 to 2.46. If this happens, then salaries or monthly payouts of Central Government employees will increase by 14% to 54% after adjusting for inflation.
Let’s see how the salary of an employee will increase in three different fitment scenarios, as per a hypothetical calculation done by experts at Ambit Capital:
- Pessimistic fitment: 1.82
- Middle case fitment: 2.15
- Optimistic case fitment: 2.46
The fitment factor is a multiplier recommended by a pay commission to determine the revised salaries of central government employees. The revised salary can be estimated by multiplying the current salary with the fitment factor.
The following calculation assumes that the Basic Salary of the employee is ₹50,000 and the applicable dearness allowance (DA) is 60% of the Basic Pay under the 7th Pay Commission. Further, it assumes that the HRA claimed by the employee is ₹15,000 and the travel allowance is ₹2160.
The of Basic Salary by the end of 2025.
Based on the above assumptions, the employee’s total salary under 7th CPC will be Basic Salary +DA+HRA+TA = ₹50,000 + ₹30,000 + ₹15,000 + ₹2160 = ₹97,160
Now, let’s look at the three scenarios:
Pessimistic fitment of 1.82
The Basic Salary will increase to ₹91,000 (₹50,000*1.82). Assuming HRA and TA to be ₹21,840 and ₹2457 respectively, the total salary will become ₹115,297.
Please note that the DA will be zero initially as the 8th CPC will reset the DA to zero while recommending its pay proposals.
Middle case fitment: 2.15
The Basic Salary will increase to ₹107,500 (₹50,000*2.15). Assuming HRA and TA to be ₹25,800 and ₹2903 respectively, the total salary will become ₹136,203. DA will be set to zero initially.
Optimistic case fitment: 2.46
The Basic Salary will increase to ₹123,200 (₹50,000*2.46). Assuming HRA and TA to be ₹24,640 and ₹3326 respectively, the total salary will become ₹151,166. DA will be reset to zero initially.
8th Pay Commission vs 7th CPC: Salary hike comparison
| Component | 7th Pay | 8th Pay (Pessimistic) | 8th Pay (Middle) | 8th Pay (Optimistic) |
|---|---|---|---|---|
| Fitment Factor | – | 1.82x | 2.15x | 2.46x |
| Base Pay (₹/month) | 50,000 | 91,000 | 107,500 | 123,200 |
| Dearness Allowance (DA) | 30,000 | – | – | – |
| House Rent Allowance (HRA) | 15,000 | 21,840 | 25,800 | 24,640 |
| Travel Allowance (TA) | 2,160 | 2,457 | 2,903 | 3,326 |
| Total Monthly Salary | 97,160 | 115,297 | 136,203 | 151,166 |
| Growth in Total Salary | – | 19% | 40% | 56% |
| Growth in Base Pay + DA | – | 14% | 34% | 54% |
Source: Source: Ambit Capital research based on hypothetical situations
An earlier report had estimated that the Government’s total payout for salaries and pensions could increase by up to due to the 8th Pay Commission.