Central government employees across the country are waiting for the implementation of the 8th Pay Commission, which is expected to revise salaries, pensions, and allowances. This revision is done according to the fitment factor, a key multiplier set by considering various factors such as inflation, employee needs, and government affordability.
Inflation is one of the important factors considered while revising salaries under the pay commission, typically reflecting the cost-of-living adjustment.
With the 8th Pay Commission on the way, here’s a look at where average inflation rates stood during the implementation of various pay commissions and how salaries have changed —
5th Pay Commission
The 5th Pay Commission was implemented in 1997, when the average inflation rate was 7% and the minimum pay per month stood at ₹2,550. The wages based on this commission simplified pay scales and offered dearness relief, but eventually, inflation overtook them.
6th Pay Commission
During the implementation of the 6th Pay Commission in 2008, the inflation rate stood at 8-10%, and the minimum monthly pay was set at ₹7,000, a ₹4,450 hike from the previous commission. This pay commission led to a structural revolution in government salaries by introducing pay bands and grade pay, resulting in sharp salary jumps.
7th Pay Commission
The 7th Pay Commission was implemented in 2016, when the average inflation rate was 5-6%. The minimum salary stood at ₹18,000, a ₹11,000 hike from the previous commission. The concept of pay matrix was introduced in this commission, along with improved pension formulas, while there were discussions around work-life balance.
8th Pay Commission: What to expect?
The 8th Pay Commission is tentatively expected to be implemented in 2026, and the inflation rate is projected to stand at 6-7%. According to a report by Ambit Institutional Equities, the expected salary hike under the 8th Pay Commission is 30-34%. However, the government has not yet declared the official details regarding it. The new pay scale will adjust for inflation and economic growth and aim for more equitable compensation across roles, as Mint reported earlier.
8th Pay Commission: Salary structure of govt employees
The salary of a government employee consists of basic pay, dearness allowance (DA), house rent allowance (HRA) and transport allowance. The basic salary of employees constitutes 51.5 per cent of their total income. DA accounts for approximately 30.9 per cent, HRA for about 15.4 per cent and travel allowance for around 2.2 per cent, the report noted.
