8th Pay Commission: What Is the Fitment Factor and How It May Affect Salaries

The 8th Central Pay Commission (CPC) has been officially approved by the Union Cabinet, setting the stage for another round of salary and pension revisions for central government employees. Headed by Justice (Retd.) Ranjana Desai, the commission will consult various stakeholders, including the National Council (JCM), before finalizing recommendations on pay structure, allowances, and pensions.

Traditionally, pay commissions are formed every 10 years. With the 7th Pay Commission implemented in January 2016, the 8th Pay Commission’s recommendations are expected to take effect from January 2026.

What Is the Fitment Factor?

The fitment factor is a multiplication number used to revise basic pay and pensions. It determines how much an employee’s current basic salary will be multiplied to calculate the new one under the new pay commission.

For example, under the 7th Pay Commission, the fitment factor was 2.57, meaning the basic pay of every central government employee was multiplied by 2.57 to arrive at the revised salary.

Why the Fitment Factor Matters

The fitment factor is central to the pay revision process because it directly influences:

• The minimum and maximum basic pay
• The overall hike in salary and pension
• The Dearness Allowance (DA) reset, which begins from zero once a new pay structure takes effect

A higher fitment factor results in a larger increase in basic pay, but it also increases the government’s fiscal burden.

Expected Fitment Factor for the 8th Pay Commission

While the official figure will only be known after the commission submits its report, analysts and employee forums have provided early projections:

• Ambit Capital estimates a range between 1.83 and 2.46
• Kotak Institutional Equities expects around 1.8
• Employee unions, like the NC-JCM, are likely to demand at least 2.57, similar to or higher than the 7th Pay Commission

This variation suggests that the final number could be influenced by inflation, the cost of living, and Dr. Aykroyd’s formula, a method based on food and commodity price changes that the government traditionally uses to calculate minimum wages.

Dr. Aykroyd’s Formula: The Basis of Pay Calculations

Named after Wallace R. Aykroyd, a 20th-century nutritionist, Dr. Aykroyd’s formula determines the minimum need-based wage. It considers the prices of essential commodities in a typical household’s consumption basket and is periodically updated by the Labour Bureau in Shimla.

This scientific approach ensures that salary revisions keep pace with inflation and cost-of-living changes, helping maintain real income levels.

How Salaries Could Change Based on Different Fitment Factors

Let’s take the current minimum basic pay of ₹18,000 (under the 7th CPC) and see how it could increase under different fitment factor scenarios:

However, the effective salary hike (after resetting DA to zero) would be lower — around 13% to 34%, depending on the factor. For instance, Ambit Capital projects a 14% to 34% effective rise, while Kotak estimates around 13%.

The Dearness Allowance Reset Explained

At the time of the 7th Pay Commission, the DA had reached 125% of basic pay. When the new structure came into force, it was reset to zero. A similar process will occur under the 8th CPC, as the current DA stands at 58%.

After implementation, the DA will again start from zero and be revised every six months to offset inflation.

Example: Current vs. Projected Minimum Salary

Here’s how the minimum pay package may evolve:

• 7th CPC (Current): ₹18,000 (Basic) + ₹4,320 (HRA) + ₹1,350 (TA) + ₹10,440 (DA @58%) = ₹34,110
• 8th CPC (Projected, Fitment Factor 2.57): ₹46,260 (Basic) + ₹11,106 (HRA) + ₹3,465 (TA) + ₹0 (DA reset) = ₹60,831

Thus, while the DA component resets, the total gross salary still sees a notable increase due to the higher basic pay.

When Will the 8th Pay Commission Take Effect?

The government has indicated that the new pay structure will likely be implemented from January 1, 2026. Employees may also receive arrears for the previous months, similar to what happened during the 7th CPC rollout.