As deliberations over the 8th Pay Commission gather pace, the fitment factor has emerged as the single most important variable that could determine the revised salaries and pensions of nearly 55 lakh central government employees and around 69 lakh pensioners.
Illustrative calculations by Bank Bazaar, as cited in a report, suggest that if the Commission recommends a 2.5x fitment factor, the minimum basic pay at Level 1 could rise from Rs 18,000 to Rs 45,000, while the maximum basic pay covered in the illustration at Level 13 could increase from Rs 1,23,100 to Rs 3,07,750.
The fitment factor is used to multiply the existing basic pay to arrive at the revised basic salary. Since allowances such as House Rent Allowance (HRA) are linked to basic pay, any increase in the fitment factor also boosts overall salary.
Under a 2.5x fitment factor, the illustrative basic pay across select levels would be:
- Level 1: Rs 18,000 → Rs 45,000
- Level 4: Rs 25,500 → Rs 63,750
- Level 6: Rs 35,400 → Rs 88,500
- Level 7: Rs 44,900 → Rs 1,12,250
- Level 10: Rs 56,100 → Rs 1,40,250
- Level 13: Rs 1,23,100 → Rs 3,07,750
The figures are illustrative and based on an assumed fitment factor of 2.5. The final revision will depend on the multiplier recommended by the 8th Pay Commission and approved by the government.
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The Commission is currently consulting employee unions, pensioners, state governments and other stakeholders. Employee organisations have sought fitment factors ranging from 3.83 to 5. However, the 8th Pay Commission is also expected to take into account the fiscal burden on the Centre and states before recommending a multiplication unit.
Even under a lower fitment factor of 2.0, salary-linked allowances would also rise because they are calculated as a percentage of revised basic pay. For instance, a Level 4 employee with a revised basic pay of Rs 51,000 would receive an estimated HRA of Rs 15,300 in X cities, Rs 10,200 in Y cities and Rs 5,100 in Z cities if the current HRA rates continue.
"Even a slight change in the multiplier (fitment factor) can significantly affect salaries at every pay level. Its impact also extends to benefits linked to basic pay, such as House Rent Allowance (HRA)," Adhil Shetty, CEO of BankBazaar, said.
Early indications suggest the Commission could adopt a cautious approach. According to The Economic Times, early indicate that the fitment factor may be close to 2.57, the multiplier used by the 7th Pay Commission, amid concerns over the fiscal burden on the Centre and states.
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The memorandum submission process concluded on June 15, after employee associations, pensioners and other stakeholders submitted their recommendations. The Commission is now evaluating those representations alongside feedback from state governments, beginning with Uttar Pradesh, Odisha and West Bengal, before preparing its final report on revised pay and pension structures.
The 7th Pay Commission had adopted a 2.57 fitment factor, increasing the minimum basic pay from Rs 7,000 to Rs 17,990, while significantly raising the government's salary and pension expenditure.
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