8th Pay Commission: ₹32,400 to nearly ₹69,000 basic pay? Fitment factor for govt salary hike decoded

Set up by Prime Minister Narendra Modi last year, the 8th Pay Commission is set to make key decisions on salary revisions and fitment factor, which will outline the updated compensation for central government employees and pensioners. Amid the debate, much of the focus is now on the fitment factor, which forms a crucial element.

Fitment factor is the multiplier that converts old basic pay into revised basic pay. A higher factor in this case means a sharper jump in salaries and pensions. It also influences gratuity-linked calculations, provident fund contributions and other inputs linked to basic pay.

Employee unions have pushed for a fitment factor going as high as 3.83, while brokerage estimates have suggested a range of 1.8 to 2.46 – with the estimated salary hikes ranging from 13% to over 34% on the higher side.

What fitment factor unions have demanded?

The National Council-JCM Staff Side, on Wednesday, 15 April — submitted a 51-page memorandum to the 8th Pay Commission, proposing a minimum basic pay of ₹69,000 with a fitment factor of 3.833.

Meanwhile, the postal employees’ body FNPO suggested a slightly lower range of 3.0 to 3.25, with minimum pay pegged at around ₹54,000.

Across unions, the broad consensus has been over a fitment factor of 3.0 to 3.25, in line with the rising inflation and recent economic developments, which could significantly influence the revised pay structure.

What brokerage firms have projected?

For the 8th Pay Commission, Kotak Institutional Equities projected the fitment factor to be somewhere between 1.8 and 2.86 – which translates to a 13% hike on the lower side – citing experts.

Projections by Ambit Capital suggested a broader range, with a base case fitment factor of 1.82—implying about a 14% hike—and an upper range of 2.15 to 2.46, which could translate into a 30–34% increase.

How the different fitment factors would affect salaries?

Fitment factor acts as a multiplier, that impacts revised basic pay.

For example, if your current basic pay is Rs18,000 and the fitment factor is 2.5, your revised basic pay becomes ₹45,000 (18,000 × 2.5).

Here’s a glimpse at how the minimum basic pay would rise – depending on the various fitment factors demanded by employee unions, and those projected by brokerage firms:

As many as 50 lakh central government employees, including defence personnel, and around 65 lakh retired central government pensioners could see basic salary rise.