8th Pay Commission – Low Fitment Factor, Higher Annual Increment – What Will Be the Salary Impact?
The growth in the basic salary of central government employees is determined by two key factors: the fitment factor and the annual increment rate. A high increment rate can considerably increase your basic pay at the time of pay revision, while a high fitment factor can accelerate your salary growth over the years. But what can happen if the 8th Pay Commission delivers a low fitment factor and increases the annual increment rate?
To see the difference, let’s first look at the fitment factor and the increment rate under the 7th Pay Commission and compare them with a scenario involving high increment rate and a high fitment factor.
Under the 7th Pay Commission, the fitment factor is 2.57, and the annual increment rate is 3%. For the 8th Pay Commission, central government employee associations have been demanding a fitment factor of up to 4.38. They are also demanding an increase in the annual increment to 7%.
Fitment factor recommendations for 8th Pay Commission
Most employees and pensioners organisations, including the National Council of the Joint Consultative Machinery (NC-JCM), have recommended a 3.833 fitment factor for employees. If accepted, this would raise the minimum salary from Rs 18,000 under the 7th Pay Commission to Rs 69,000 under the 8th Pay Commission.
However, many experts say the 8th CPC may decide on a fitment factor of up to 2.5. However, it will be known only when the government notifies the 8th Pay Commission report.
Organisation | Proposed minimum pay for 8th CPC | Proposed fitment factor for 8th CPC |
| National Council of the Joint Consultative Machinery (NC-JCM) | Rs 69,000 | 3.833 |
| All India Defence Employees’ Federation (AIDEF) | Rs 69,000 | 3.833 |
| Federation of National Postal Organisations (FNPO) | Rs 69,000 | 3.833 |
| All India New Pension Scheme Employees Federation (AINPSEF) | Rs 69,000 | 3.833 |
| Indian Railways’ Technical Supervisors’ Association (IRTSA) | Multiple with minimum at Rs 52,560 | 2.92, 3.50, 3.80, 4.09, 4.38 |
| Delhi government school teachers | Rs 47,210 | 2.62 |
| Chennai GPO Pensioners | Rs 68,000 | 3.77 |
| Bharat Pensioners Samaj (BPS) | Rs 69,000 | 3.833 |
Increment rate recommendations for 8th Pay Commission
Recommendations to the 8th Pay Commission about the fitment factor also vary. Several bodies, including the NC-JCM, the All India Defence Employees’ Federation (AIDEF), the Federation of National Postal Organisations (FNPO), are demanding a 6% annual increment. However, some organisations, such as the All India New Pension Scheme Employees Federation (AINPSEF), have recommended a 7% increment rate.
Organisation | Proposed annual increment |
| National Council of the Joint Consultative Machinery (NC-JCM) | 6% |
| All India Defence Employees’ Federation (AIDEF) | 6% |
| Federation of National Postal Organisations (FNPO) | 6% |
| All India New Pension Scheme Employees Federation (AINPSEF) | 7% |
| Indian Railways’ Technical Supervisors’ Association (IRTSA) | 5% |
High fitment factor vs high increment rate: Salary estimates for Level 5-7 employees
The basic argument behind recommending a high increment rate is that it will reduce the dependency on the 10-yearly basic salary revision through a pay commission. The AINPSEF says that with a 7% increment rate, the gross salary of a central government employee will double in 7-8 years.
Here, through estimates, we will show the difference in salaries of Level 5-7 employees’ basic pay in 1, 5 and 10 years at different increment rates and fitment factors. For calculations, we are assuming three conditions.
- 2.57 fitment factor, 3% increment rate
- 2.1 fitment factor, 7% increment rate
- 2.57 fitment factor, 7% increment rate
Level 5 salary estimates under high increment rate vs high fitment factor
Level 5 basic pay as per the 7th Pay Commission = Rs 29,200
Path | Year 1 basic | Year 5 basic | Year 10 basic |
| 2.57 fitment factor, 3%/yr increment | ₹ 75,044 | ₹ 84,463 | ₹ 97,915 |
| 2.1 fitment factor, 7%/yr increment | ₹ 61,320 | ₹ 80,378 | ₹ 1,12,734 |
| 2.57 fitment factor, 7%/yr increment | ₹ 75,044 | ₹ 98,367 | ₹ 1,37,965 |
Level 6 salary estimates under high increment rate vs high fitment factor
Level 6 basic pay as per the 7th Pay Commission= Rs 35,400
| Path | Year 1 basic | Year 5 basic | Year 10 basic |
| 2.57 fitment factor, 3%/yr increment | ₹ 90,978 | ₹ 1,02,397 | ₹ 1,18,706 |
| 2.1 fitment factor, 7%/yr increment | ₹ 74,340 | ₹ 97,445 | ₹ 1,36,671 |
| 2.57 fitment factor, 7%/yr increment | ₹ 90,978 | ₹ 1,19,254 | ₹ 1,67,259 |
Level 7 salary estimates under high increment rate vs high fitment factor
Level 7 basic pay as per the 7th Pay Commission= Rs 44,900
| Path | Year 1 basic | Year 5 basic | Year 10 basic |
| 2.57 fitment factor, 3%/yr increment | ₹ 1,15,393 | ₹ 1,29,876 | ₹ 1,50,562 |
| 2.1 fitment factor, 7%/yr increment | ₹ 94,290 | ₹ 1,23,595 | ₹ 1,73,348 |
| 2.57 fitment factor, 7%/yr increment | ₹ 1,15,393 | ₹ 1,51,257 | ₹ 2,12,145 |
From the above estimates, you can see that with a high increment rate, salary growth may not be as significant as it would be with a high fitment factor and a 3% growth rate. But the gap narrows in 5 years, while in 10 years, a high annual increment rate leaves the payout of a high fitment factor far behind.
But how a high increment rate or the fitment factor impacts the payouts of employees will be known when the 8th Pay Commission report is implemented.
Source: https://economictimes.indiatimes.com/wealth/save/8th-pay-commission-salary-fitment-factor-calculator-latest-news-high-multiplier-vs-increment-rate-how-pays-of-level-5-7-employees-can-change-in-10-years/articleshow/135760306.cms?from=mdr
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