8th Pay Commission: Lower Fitment Factor Possible If DA-Basic Pay Merger Gets Nod, Say Sources

The 8th Pay Commission may end up proposing a fitment factor lower than what was initially expected if the centre ends up merging a dearness allowance with a basic salary, according to two employee union leaders who are involved in the deliberations.

While staff forums have talked about seeking a fitment factor in the range of 2.57 to 2.86, the people in the know indicated that the 8th Pay Commission might recommend a multiplication unit which could be significantly lower if the DA-basic pay merger gets an official nod.

In such a scenario, the fitment factor "could be lesser than what has been talked about in news reports recently", one of the persons cited above told NDTV Profit.

Notably, the fitment factor is the multiplication unit used for revising the salaries of government employees and pensions of retirees. In 2016, the 7th Pay Commission implemented a fitment factor of 2.57 for revising salaries and pensions.

A senior leader of the staff side of the National Council-Joint Consultative Machinery, or NC-JCM—an official body comprising union leaders and bureaucrats—had told NDTV Profit in February that they would be asking the 8th Pay Commission to at least propose the same fitment factor, if not higher.

However, the union leaders privy to the matter said the position could be softened if DA gets merged into basic pay, as it would automatically lead to the revision of various allowances.

Under the 5th Pay Commission—which lasted from 1996 to 2006—the norm was to merge the basic pay with DA once the key allowance crossed 50%. Accordingly, the government had integrated DA with basic salary in 2004.

However, the 6th Pay Commission—implemented from 2006 to 2016—had discontinued this rule. The 7th Pay Commission had proposed its restoration, but the government had not accepted it back then, the union leaders explained.

Following the 2% hike announced last week, the DA presently stands at 55% of the basic pay set under the 7th Pay Commission. If 50% of this is merged with the basic pay—as demanded by the staff forums—then the minimum base salary can rise from Rs 18,000 to Rs 27,000 even before the implementation of 8th Pay Commission.

Additionally, the fitment factor to be recommended by the pay panel would be multiplied on the revised basic pay, which would lead to a sharper increment.

Notably, the Ministry of Finance clarified in the Parliament last month that it is presently not considering any proposal to integrate the DA with basic pay of central government employees.

The union leaders in the know, however, said that the finance ministry has not outrightly ruled out the merger, but has only stated that such a proposal is not currently under consideration. Till December, it was also said that the formation of 8th Pay Commission was not under consideration, but the Cabinet approved its setup in January, one of the persons noted.

Similarly, it was earlier assumed that there will no alternative to the National Pension System, but then the Centre came up with the Unified Pension Scheme last year, the person said.

Notably, the formal setup of 8th Pay Commission is expected in the days to come. The panel will hold deliberations with various stakeholders before submitting its report on fitment factor and other modalities for the revision of salaries and pensions.