The possibility of the 8th Pay Commission has become a key topic of discussion ahead of the Union Budget 2025-26, set to be presented on February 1, 2025. Here are the key points:
Demands for the 8th Pay Commission:
- Trade Unions’ Demands:
- In a pre-budget meeting on January 6, 2025, trade union leaders, including Bharatiya Mazdoor Sangh and CITU, urged Finance Minister Nirmala Sitharaman to announce the 8th Pay Commission.
- CITU’s National Secretary, Swadesh Dev Roye, pointed out that over 10 years have passed since the 7th Pay Commission was set up in 2014.
- Confederation’s Request:
- On December 12, 2024, the Confederation of Central Government Employees & Workers wrote to Prime Minister Modi, emphasizing the need for the 8th Pay Commission to address inflation and depreciation in money value.
Government’s Stand:
- No Current Plans:
- The Finance Ministry clarified on December 3, 2024, that there is no proposal to constitute the 8th Pay Commission “at present.”
- This response was given during a query in the Rajya Sabha.
- 7th Pay Commission:
- The recommendations of the 7th Pay Commission, constituted in 2014 and implemented in 2016, are currently in effect.
Speculations Around Salary Hikes:
- Potential Mechanisms:
- Discussions suggest that future salary revisions might be linked to performance or inflation rather than forming a new pay commission.
- Fitment Factor Increase:
- Reports speculate that If the fitment factor is increased to 2.86, as speculated, the basic pay of employees would see a 186% increase. For example: A current basic salary of ₹18,000 would rise to ₹51,480 (₹18,000 × 2.86).
- However, there is no official confirmation.
- The 7th Pay Commission set the fitment factor at 2.57, resulting in a 157% increase in the basic pay.
History of Pay Commissions in India
The Pay Commission is a periodic body constituted by the Government of India to review and recommend revisions in the salary, allowances, and pension structure of central government employees. These recommendations are typically implemented after thorough review and approval by the government. Since independence, India has seen seven pay commissions, each established approximately every 10 years.
- 1st Pay Commission (1946):
- Year Constituted: 1946
- Key Focus: Ensuring an equitable wage structure.
- Fitment Factor: Not introduced; salaries were based on existing colonial frameworks.
- 2nd Pay Commission (1957):
- Year Constituted: 1957
- Key Focus: Improving service conditions and addressing inflationary pressures.
- Fitment Factor: Not explicitly used but introduced incremental changes.
- 3rd Pay Commission (1973):
- Year Constituted: 1970; recommendations implemented in 1973.
- Key Focus: Rationalizing pay structures based on socio-economic conditions.
- Fitment Factor: First structured implementation of a formula for pay revisions.
- 4th Pay Commission (1986):
- Year Constituted: 1983; recommendations implemented in 1986.
- Key Focus: Bridging the gap between rising living costs and salaries.
- Fitment Factor: Introduced a factor of 1.3x the existing pay.
- 5th Pay Commission (1997):
- Year Constituted: 1994; recommendations implemented in 1997.
- Key Focus: Addressing stagnation in salaries and boosting employee morale.
- Fitment Factor: Increased to 1.86x the existing pay.
- 6th Pay Commission (2008):
- Year Constituted: 2006; recommendations implemented in 2008.
- Key Focus: Performance-linked incentives and rationalized pay structures.
- Fitment Factor: 2.57x, leading to significant salary hikes.
- 7th Pay Commission (2016):
- Year Constituted: 2014; recommendations implemented in 2016.
- Key Focus: Simplifying salary structures and addressing inflation.
- Fitment Factor: 2.57x, resulting in an overall 23.5% increase in salaries.
What is the Fitment Factor?
The Fitment Factor is a multiplier used to calculate the revised salary in a new pay commission. It adjusts the basic pay to account for inflation, cost of living, and economic growth.
Calculation Example:
For the 7th Pay Commission:
- Basic Pay (6th CPC): ₹10,000
- Fitment Factor (7th CPC): 2.57
- Revised Basic Pay: ₹10,000 × 2.57 = ₹25,700
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Disclaimer: This article has been created for educational purposes especially for UPSC CSE aspirants.
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