Speculation is growing over how much central government workers in India could earn once the 8th Pay Commission takes effect, even though the commission has not yet been officially set up. Two major financial research firms, Ambit Capital and Kotak Institutional Equities, have released projections showing that salaries could increase anywhere between 13% and 54%, depending on the final pay revision factor the government adopts.
At the centre of the debate is the “fitment factor” — a multiplier applied to the current basic salary to determine the new pay structure. The factor is key in calculating the basic pay jump, though the actual increase is often smaller because the dearness allowance (DA) resets to zero whenever a new pay commission comes in.
Ambit Capital’s July 9 report estimates the fitment factor could be between 1.83 and 2.46. In its base case projection of 1.82, salaries would go up by around 14%. If the factor is 2.15, the increase could reach 34%, while the upper estimate of 2.46 points to a 54% pay rise. For example, a central government employee earning ₹97,160 (including allowances) could see their pay rise to ₹115,297 at the 1.82 level, ₹136,203 at 2.15, and ₹151,166 at 2.46.
Kotak Institutional Equities, in its July 21 note, takes a more conservative view. It predicts the fitment factor will likely be around 1.8, meaning workers would get about a 13% raise.
The importance of DA in the equation is significant. Before the 7th Pay Commission took effect in 2016, DA stood at 125% of basic pay. That commission recommended a fitment factor of 2.57, increasing the minimum basic salary from ₹7,000 to ₹18,000 — but the actual effective increase after DA reset was only 14.3%. Now, DA is at 55% of basic pay, far lower than in 2016, which could result in a bigger effective hike even with a smaller fitment factor.
Ambit’s analysts note that the government could realistically consider a fitment factor anywhere between 1.83 and 2.46, but the final figure will only be known once the 8th Pay Commission is formally established. The process will involve setting the Terms of Reference, consulting stakeholders, and reviewing financial implications — a procedure expected to take several months.
The last pay commission’s recommendations took nearly two years from formation to implementation, suggesting that while workers are already anticipating higher salaries, any changes may not come quickly.
If the higher end of the projections becomes reality, the increases would significantly boost household incomes for millions of government employees and pensioners, likely affecting consumer spending, savings rates, and even the real estate market. On the other hand, such a sharp rise could also increase the government’s salary and pension bill, putting more strain on public finances.
For now, employees, economists, and market analysts will be watching closely for any official announcement on the composition of the 8th Pay Commission and its timeline. Until then, projections like those from Ambit Capital and Kotak Institutional Equities will continue to fuel debate over how generous the eventual salary hike might be.
