The median salary of Union government employees can rise in the range of Rs 14,000 to Rs 19,000 per month after the implementation of 8th Pay Commission, Goldman Sachs said on Monday.
An estimated 50 lakh central government employees and 65 lakh pensioners will benefit from the implementation of the 8th Pay Commission. The panel is expected to be formed in April and its report likely to be implemented in 2026 or 2027, the financial services firm said in a note.
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Goldman Sachs ran a broad-scenario analysis for the central-government-employee cohort, which is presently earning a median monthly salary (pre-tax) of Rs 1 lakh. "While only for illustrative purposes, this analysis suggests the cohort could benefit by an additional Rs 14,000 to Rs 19,000 per month."
As part of its analysis, Goldman Sachs assumed three scenarios. If the Centre allocates Rs 1.75 lakh crore for the implementation of 8th Pay Commission — and assuming that 50% of that allocation is used for the revision of salaries and the remainder for pensions — then the median salary can rise from Rs 1 lakh to Rs 1,14,600 per month, it said.
If the government allocates a budget of Rs 2 lakh crore, then the median salary can rise from Rs 1 lakh to Rs 1,16,700 per month. The same could rise to Rs 1,18,800 per month if the allocation for 8th Pay Commission's implementation is Rs 2.25 lakh crore.
The Centre incurred an estimated cost to the exchequer of Rs 1.02 lakh crore during the implementation of 7th Pay Commission. Although it was implemented retrospectively from January 2016, the revised salaries and pensions were rolled out from July 2016. As a result, the fiscal impact was absorbed in financial year 2016–17.
After its formation, the 8th Pay Commission will hold deliberations with several stakeholders to determine the fitment factor and other modalities for the revision of salaries and pensions. The employee unions, which will be involved in the deliberations, have hinted that they would seek a fitment factor of 2.57 or higher, which was what the 7th Pay Commission had recommended.
However, former Finance Secretary Subhash Chandra Garg told a news channel in January that such an expectation could be unrealistic, adding that the fitment factor could be of around 1.92.
The Ministry of Finance clarified in Parliament on March 18 that it was not considering the merger of the dearness allowance into basic pay of central government employees. This was the demand raised by the staff side of National Council-Joint Consultative Machinery — an official employees' forum — in its meeting with the Department of Personnel and Training last month.
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