8th Pay Commission: Good news for government employees! Salary may increase by up to 34%, know the fitment factor and time limit
8th Pay Commission: Central government employees and pensioners are eagerly waiting for the panel to be formed by the government and the ToR to be finalized. According to a recent report by brokerage firm Ambit Capital, employees and pensioners can expect a hike of up to 34% in their salary under the 8th Pay Commission, let’s know…
8th Pay Commission: More than 1.2 crore central government employees and pensioners are eagerly waiting for the panel to be constituted by the government and the Terms of Reference (ToR) to be finalized. These recommendations will contain specific guidelines and objectives to review and recommend the salary and pension of government employees.
According to our partner Financial Express, it was earlier expected that the next pay commission would start its term from January 1, 2026, but now it seems impossible. Because till now not much work has been done regarding finalizing the ToR and the appointment of key members.
According to a recent report by brokerage firm Ambit Capital, central government employees and pensioners can expect an increase of up to 34% in their salary under the 8th Pay Commission. The report also said that after the implementation of the recommendations of the commission, these will not only lead to growth in the income of government employees but will also give a tremendous boost to consumer spending in the country.
The brokerage report said that the 7th Pay Commission (January 2016 – December 2025) implemented a nominal salary hike of 14% (the lowest since 1970). We expect the 8th Pay Commission to announce a 30-34% hike in salary and pension to cover 1.1 crore beneficiaries to boost consumption.
What will be the fitment factor under the 8th Pay Commission?
Ambit Capital’s report said that the fitment factor in the 8th Pay Commission can be between 1.83 to 2.46 i.e. the new salary will be decided by increasing the existing basic salary of the employees by this multiplier.
For example, in the 7th Pay Commission, this factor was kept at 2.57, due to which the minimum basic salary increased from Rs 7,000 to Rs 18,000. However, after resetting the dearness allowance (DA), the actual growth was only 14.3%.
When can the recommendations of the new pay commission be implemented?
The government may have announced the 8th Pay Commission, but its terms of reference (ToR), chairman and members have not been appointed yet. In such a situation, doubts are deepening on the possibility of its implementation from January 2026.
The Ambit report also states that the 7th Pay Commission took 18-24 months to be implemented. Therefore, if the process is further delayed, this commission may be implemented in FY 2027 (FY 2026-27).
What will pensioners get?
According to the Ambit report, pensioners will also get an increase in basic pay and dearness allowance (DA). However, they are not eligible for HRA or other allowances, so they will get slightly less benefits on a percentage basis.
The report said that under the Unified Pension Scheme (UPS), 50% of the last salary (as base salary) is now assured from FY 2026. This new pension scheme UPS has come into effect from April 2025 and has become an alternative to the National Pension Scheme (NPS).
How much burden will the 8th Pay Commission put on the government?
Ambit Capital estimates that this 30-34% growth in salary and pension will put an additional burden of Rs 1.3 to 1.8 lakh crore on the government. Its direct impact can be seen on GDP by 30-50 basis points.
The report also estimates that this will increase consumer spending in the country rapidly and will greatly benefit the FMCG, BFSI, retail and automobile sectors.
Why is a pay commission necessary?
A new pay commission is formed every 10 years to keep the salaries of government employees in line with the private sector and to retain talented personnel in government service.
Ambit’s report says that this commission will not only upgrade the salary structure but will also accelerate the economic activities of the country.
Now all eyes are on the next official announcement of the central government and the outline of the commission. If the process is expedited, more than 1 crore employees and pensioners may soon get a big relief in the form of revised salary and pension.
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