The central government has officially announced the implementation of the 8th Pay Commission starting 1 January 2026, aiming to revise the salary structure, pensions, and allowances of central government employees and pensioners. The Union Cabinet, under the leadership of Prime Minister Narendra Modi, approved the formation of the 8th Pay Commission on 16 January 2025.
This major move is expected to benefit over 50 lakh central government employees and around 65 lakh pensioners across India. As per sources, the commission may propose a fitment factor of up to 2.86, which could result in a significant salary hike. Based on current projections, salaries could increase from ₹40,000 to ₹1 lakh per month, depending on grade and pay level.
8th Pay Commission: Focus on Salary Hike and Level Mergers
One of the major proposals under the 8th Pay Commission includes the merger of several pay levels to simplify and streamline the pay matrix. Staff representatives have suggested the government merge:
- Level 1 with Level 2
- Level 3 with Level 4
- Level 5 with Level 6
This proposed merger aims to eliminate disparities, reduce stagnation in promotions, and provide better financial growth opportunities for employees in lower pay bands. Currently, a Level-1 employee earns a basic salary of ₹18,000, while Level-2 receives ₹19,900. After the merger and revision, the starting basic pay is expected to rise to ₹51,480.
Fitment Factor to Drive Salary Growth
The fitment factor plays a crucial role in salary and pension adjustments. It acts as a multiplier to uniformly revise pay across different levels. During the implementation of the 7th Pay Commission, the fitment factor was set at 2.57, raising the minimum salary from ₹7,000 to ₹18,000 and pensions from ₹3,500 to ₹9,000.
For the 8th Pay Commission, though the official fitment factor is yet to be declared, estimates suggest it could range from 2.5 to 2.86, resulting in a sharp increase in salaries and pensions. This would align salaries with modern economic conditions and help central employees cope with rising living costs.
Budget 2025 and 8th Pay Commission
Although the Union Budget 2025 did not explicitly mention the financial implications of implementing the 8th Pay Commission, several proposals for taxpayer relief were included. Meanwhile, the terms of reference for the commission have not yet been released.
Despite this, expectations are high that the 8th Pay Commission will bring much-needed reforms, especially in areas like minimum wage standards, career growth, and transparent salary structures.
Conclusion
The implementation of the 8th Pay Commission marks a significant step in enhancing the financial well-being of central government employees and pensioners. With the anticipated salary hikes, level mergers, and increased fitment factor, the commission is expected to bring a positive transformation in the current pay system. All eyes are now on further announcements from the government regarding the terms, implementation details, and final recommendations of the 8th Pay Commission.