Discussion of the Fitment Factor within the Eighth Departmental Commission

Central employees are closely monitoring the work of the 8th Pay Commission as various aspects are being discussed, including basic salary, fixation coefficient, and pension provision. Simultaneously, there is an increasing need to raise the House Rent Allowance (HRA) due to the constant rise in rental prices and cost of living in cities.

Trade unions insist on the necessity of adjusting current HRA rates to account for current inflation and rental prices. If a decision is made to increase HRA in conjunction with applying a fixation coefficient that increases the basic rate, the share of HRA in the salary of central employees could significantly rise. For instance, for a Level 10 employee, the HRA could potentially exceed ₹57,671 per month, based on assumptions of a 2.57 fixation coefficient and a 40% HRA rate. However, it should be noted that this is not yet a final increase, as neither the Pay Commission nor the government has made any decisions on this matter.

The House Rent Allowance is provided to central employees to cover accommodation expenses in the city where they are posted and is part of their income. The amount of this payment depends on the employee's basic rate and the category of the city where they work. In recent years, rental costs and other living expenses in major cities have increased substantially. Therefore, trade unions argue that the existing HRA rates must be revised in line with current costs. Currently, central employees receive 30%, 20%, and 10% respectively in cities of categories X, Y, and Z, which was established after the revision in January 2024. Now, before the 8th Pay Commission, trade unions have put forward demands to increase these rates.

The demands of various trade unions are not uniform, but most proposals exceed the current HRA rates. The National Confederation of Joint Consultative Mechanism (NC-JCM), representing the interests of central government employees and pensioners in India, has requested HRA rates of 40%, 35%, and 30% for cities of categories X, Y, and Z. A similar demand was put forward by the All India Defence Employees Federation (AIDEF). Furthermore, the organization demanded the extension of such benefits, like HRA, to pensioners. On the other hand, the Indian Railways Technical Supervisors Association (IRTSA) proposed setting four different HRA rates: 40%, 30%, 20%, and 10%. Thus, the focus of the trade unions is not only on increasing the basic rate but also on increasing the HRA rate in line with current expenses.

It is easiest to understand the house rent allowance by viewing it as a percentage of the basic rate. If an employee's basic salary is ₹50,000 and HRA is 30%, the HRA amount will be ₹15,000. If the HRA rate rises to 40%, the HRA will increase to ₹20,000, giving the employee an additional monthly income of ₹5,000 just from the change in the HRA rate. However, if the 8th Pay Commission increases the basic rate through the fixation coefficient, the effect will be much more significant, as HRA will be calculated based on the new basic salary.

According to the 7th Pay Commission, the initial basic rate for a Level 1 employee is ₹18,000. If the employee is in a Category X city, at the current HRA rate of 30%, they receive: ₹18,000 multiplied by 30% = ₹5,400 HRA. Suppose a fixation coefficient of 2.1 is applied in the 8th Pay Commission; then the new basic rate could be: ₹18,000 multiplied by 2.1 = ₹37,800. If the HRA rate remains at 30%, the HRA will be: ₹37,800 multiplied by 30% = ₹11,340, which means an increase in HRA of ₹5,940 compared to the previous ₹5,400. If, in this example, the HRA rate rises to 35%, the calculation would be: ₹37,800 multiplied by 35% = ₹13,230, ensuring an increase in HRA of ₹7,830 relative to the original ₹5,400. It is important to remember that these are only hypothetical calculations, and the final decision on the basic rate and HRA will only be taken after the recommendations of the 8th Pay Commission and approval by the government.

Let's consider the situation for Level 10 central employees. The initial basic rate according to the 7th Pay Commission is ₹56,100. At current HRA rates, the situation is as follows: in Category X — 30% of ₹56,100, which equals ₹16,830; in Category Y — 20% of ₹56,100, amounting to ₹11,220; and in Category Z — 10% of ₹56,100, which equals ₹5,610. This demonstrates that even at the same level, the HRA amount varies depending on the city category. If the 8th Pay Commission leads to an increase in the basic rate through the fixation coefficient and simultaneously raises the HRA rate, the difference in amounts can become very substantial.

Applying a fixation coefficient of 2.1 to the Level 10 basic rate (₹56,100) will lead to a potential new basic rate: ₹56,100 multiplied by 2.1 = ₹1,17,810. If the HRA rate is set at 40% in this scenario, the resulting HRA will be: ₹1,17,810 multiplied by 40% = ₹47,124. Thus, in this forecast, the HRA could reach approximately ₹47,124 per month. If the HRA rate is 35%, the calculation will be: ₹1,17,810 multiplied by 35% = ₹41,234, and at a 30% rate — approximately ₹35,343.

Central civil servants expect about ten years before another review of their salaries will take place. Now that the 8th departmental commission council has been formed and is consulting with unions of employees and pensioners in various cities, an important demand has been put forward.

The main claim is that the review cycle for state employees' salaries and pensions should be every five years, not every ten. This would allow employees to avoid waiting a whole decade for the next salary and pension review.

This demand goes beyond a simple pay raise. If the salary review period is shorter, the wage structure can be adjusted more regularly in line with inflation, economic conditions, and changing employee needs. It is important to understand the current system, the reasons for the five-year review demand, and the potential impact on employees and pensioners.

Currently, changes in the salary structure of central civil servants occur approximately every ten years. It was within this system that the 7th departmental commission council was introduced in 2016, and now the 8th departmental commission council is working. This means that after a major salary review, employees have to wait a long time for the next update.

The demand to reduce this period from ten to five years is now presented to the 8th departmental commission council. If the review cycle is shortened to five years, it will lead to a more frequent review of the employees' salary structure. For example, if a major change in the salary structure is introduced in 2026, under a five-year regime, the next review could take place around 2031, whereas under the current ten-year cycle, one would have to wait until 2036.

However, this does not guarantee that the salary will increase by a certain percentage every five years; it will depend on the government's recommendations and the relevant departmental commission council.

Since inflation, rent, children's education costs, healthcare, and daily necessities change rapidly in the long term, long intervals between salary reviews can negatively affect workers' real income. With a five-year cycle, the review of the salary structure can happen relatively faster, allowing for the consideration of changing economic conditions when setting wages. This is why employee unions insist on greater regularity of salary reviews.

Furthermore, this demand also affects pensioners. The recommendations of the departmental commission council also concern pensions. If the salary review cycle is reduced from ten to five years, it may also affect the system of changes related to pensions. However, the exact nature and degree of changes in pensions will depend on future government and commission recommendations.

The 8th departmental commission council has been formed and is collecting proposals from employees, pensioners, and their organizations. During meetings and discussions held in different cities, opinions are gathered on issues related to salaries, allowances, pensions, and service conditions. Among such proposals are demands to shorten the salary review period. Thus, at the moment, this demand is at the level of proposals and discussions, and a decision on its implementation has not yet been made.

No, it is important to understand that presenting the demand to the 8th departmental commission council does not mean it has been adopted. The commission will review proposals from various employee and pensioner unions and then present its recommendations. After that, the government will make a decision on these recommendations. Therefore, at the moment, the five-year salary review should be considered a key demand, not an approved rule.

Central employees and pensioners are awaiting changes in their salary and pension amounts following the 8th Departmental Commission Meeting. Consequently, demands have been put forward that could lead to a significant increase in the minimum wage, although a final decision has not yet been made.

Currently, various employee and pensioner organizations are submitting their requests to the government. According to reports, during recent meetings between the team of the 8th Departmental Commission in Chennai and the trade unions, the All India Federation of Pensioner Associations proposed setting the minimum basic salary at 69,000 rupees. This application is based on a fitment factor of 3.83.

The organizations argue that given inflation and rising family expenses, a substantial salary increase is necessary if the recommendations of the 8th Departmental Commission are implemented after a long delay.

During the 7th Departmental Commission Meeting, the minimum basic salary for central employees was 18,000 rupees. Applying a fitment factor of 3.83 to this amount yields an approximate result of 69,000 rupees. It is based on this calculation that the pensioner organizations demanded a minimum basic salary of 69,000 rupees for the 8th Departmental Commission Meeting. However, this is only one of the demands, not an approved minimum wage.

Several other trade unions have also voiced similar demands. In addition to the minimum basic salary of 69,000 rupees and a fitment factor of about 3.83, organizations such as the National Council of the Joint Consultative Machinery (NC-JCM), AIDEF, FNPO, and AINPSEF have presented similar proposals. Furthermore, BPMS demanded an even higher fitment factor, proposing a minimum wage of 72,000 rupees with a fourfold fitment factor.

The Indian Association of Railway Technical Supervisors submitted a separate proposal, insisting on applying the fitment factor not at a uniform rate but at different levels. For this, they proposed a range of fitment factors from 2.92 to 4.38. The trade unions justify their demands by citing the rise in prices of daily goods and services, as well as increased household expenses, emphasizing the need to account for current family needs in the new pay structure.

Experts believe that while the fitment factor is an important element, it alone does not allow for an assessment of the employee's total income. Changes in salary also depend on allowances, pensions, and other types of payments. Therefore, it is crucial how all these components will be integrated into the final recommendations of the 8th Departmental Commission Meeting.

Reviewing past experience, it is noted that during the 7th Departmental Commission Meeting, NC-JCM requested a fitment factor of 3.71, but the government ultimately approved a factor of 2.57. This demonstrates that the demands of the trade unions and the final figure approved by the government can differ. Therefore, central employees and pensioners should consider 69,000 rupees only as a demand from the organizations, not as an established basic salary. Final changes in the fitment factor, minimum basic salary, allowances, and pensions will depend on the recommendations of the 8th Departmental Commission Meeting and subsequent government approval.

The central government constituted the 8th Departmental Commission Meeting on November 3, 2025, giving it 18 months to prepare and submit a final report. More than ten months of this period have already passed. Now, everyone's attention is focused on the chairperson of the commission, Judge Ranjana Prakash Desai, and her team. Based on the current timeline, the commission's report may appear around May-June 2027, after which it will become clearer how much salaries and pensions for employees and pensioners will actually change.