8th Pay Commission : The much-awaited 8th Pay Commission seems to be now one step closer to becoming a reality, giving much needed respite to around 1 crore central government workers and pensioners all over India.
And now that the 7th Pay Commission’s salary hike formula has been finalised, government employees are already looking forward to their take home in these new pay structures.
This is an important chapter in the decadal ritual of pay revision where government employees are able to keep up with the inflation trend and the changing economic scenario.
8th Pay Commission The Aykroyd Equation: The Root Of The New Pay Scale
The Aykroyd formula — time-tested but incomprehensible to most — forms the core of the 8th Pay Commission formula for salary hikes.
The formula, established by nutritionist Dr. Wallace Aykroyd, takes minimum wages up to the level necessary for an adequate diet, clothing and housing for an average worker.
The formula had been formally adopted by the 15th Indian Labour Conference in 1957 and continued to be used for determining wages of government staffs.
The 7th Pay Commission used this formula to multiply the minimum basic salary by 2.57 to be increased from ₹7,000 to ₹18,000.
The 8th Pay Commission will use the Aykroyd Formula with current inflation rates of necessary articles and commodities in the market to fix the minimum pay, such that government income is tarred to current cost of living.
8th Pay Commission Fitment Factor: The LIne which Unlock Multiplication Factor
The fitment factor is the magic number behind the calculation of salary hike. The revised pay has been calculated with 3% increment in the Multiplication Factor (from 2.57 to 2.62), applicable for all Categories of Employees.
8th Pay Commission Fitment Factor Here are a few fitment factor possibilities for the 8th pay commission:
Conservative Estimate (1.92-2.08): There is another view to what Former Finance Secretary, Subhash Chandra Garg, has said earlier, that actual fitment factor could be in the range of 1.92 to 2.08.
With these multipliers, the minimum wage will become ₹34,560 to ₹37,440, up from ₹18,000.
Medium Estimate (2.28): A few documents suggest a possible fitment factor of 2.28, equivalent to a 34.1% hike in minimum wage. This would see the minimum pay go up to around ₹41,040.
Positive Estimate (2.86): Employee unions, on the other hand, have called for higher fitment factor of 2.86, which would push the minimum salary to ₹51,480.
The fitment factor is calculated neutralizing the accumulated Dearness Allowance (DA) since the 7th Pay Commission has been made effective.
As of early 2025, the DA is 53% of basic salary. Till January 2026, when the 8th Pay Commission is estimated to come into effect, the DA could touch nearly 70% after the due installments.
8th Pay Commission Merger of Dearness Allowance
Cumulatively, the accumulated Dearness Allowance can be added to the basic salary which is the major part of the new salary formula.
In stone DA is now settled at 53% (effective from 1st July, 2024) which will be increased in further installments and the effected amount will be paid to the employees as D.A., till 8th Pay Commission functioning.
Four installments of DA are due from January 2026 – July 2024, January 2025, July 2025, January 2026.
In terms of projected inflation, the Effective DA rate may touch around 70% by Jan 2026. This DA will be added with the basic pay for calculating the new fitment factor.
Some employee unions have already demanded that the DA should be merged with the basic salary before the 8th Pay Commission is enforced as DA has already crossed 50% and it is a tradition to merge it beyond 50%, the financial secretary added.
8th Pay Commission Pay Matrix & Respective Level Pay
The revised pay matrix to be accomplished with the 8th Pay Commission, from the 7th Pay Commission will pave the way.
It is this matrix that offers an organised method to address salary augmentation for the various levels of government functionaries.
Timeline for Implementation
The 8th Pay Commission will become effective from January 1, 2026, subject to the general practice of the commission being constituted every 10 years.
Constitution of the 8th Central Pay Commission The Governor of India in Council approved constitution of the 8th Central Pay Commission on January 16 2025 and the same was confirmed by Minister of State in Ministry of Finance replying to the questions in Rajya Sabha dated February 4 2025.
A 13 member committee led by Shiv Gopal Mishra with members from affiliated unions like AIRF, NFIR, AIDEF, etc is preparing a note which among other things will include the feedback on the (Modified) Assured Career Progression Scheme. This committee will convene in June 2025 to complete this document.
The commission chair, its members and ToR have not been notified by the government so far.
Following its formation, the commission may start interacting with various stakeholders to recommend new pay scales and pension benefits for the central government staff.
8th Pay Commission Beyond Basic Pay: Systemic Overhaul
The recommendations of 8th Pay commission affects more than basic pay. Other major modifications on the table are:
Allowance Modifications:
HRA may also go up by 15-25%
TA may be revised according to inflation
Additional charges could be justified or incorporated
Pension Reforms:
Improvements in pension scheme benefiting nearly 65 lakh pensioners
Better post- retirement benefit
Resolution of pension disparities and adjustments for inflation
Equitable Distribution:
Greater salary rises at lower end of scale
Better spread across the workforce
All pay levels better protected from financial insecurity
8th Pay Commission Economic Implications
The 8th Pay Commission roll out will have considerable impact on the economy, particularly on the Union Budget FY2026-27.
Though the pay hikes will raise expenditure, they will stimulate consumption, which in turn will add to growth as government employees have higher disposable income.
Government will have to strike a balance between staff expectations and fiscal prudence.
The 8th Pay Commission’s cost to the exchequer is likely to be far more than the 7th Pay Commission’s cost, which was around ₹1.02 lakh crore, in view of the higher number of beneficiaries and higher base of computation.
8th Pay Commission State Government Adoption
State governments are not bound to accept the recommendations of the central Pay Commissions – but, usually their pay scale for employees would be on the same track with minimum or changes here and there.
If the 8th Pay Commission is also accepted for central government staff, the state governments too will likely to adopt their central counterpart guidelines that could bring cheer to millions other state government employees working countrywide.
8th Pay Commission Conclusion and Next Steps
8th Pay Commission could be an important opportunity to fulfil the changing financial responsibilities of central government employees from current inflationary pressure and economic realities.
Taking Aykroyd Formula as its core and combined with modern economic theories, the new salary increment formula intended to ensure fair and just salary increment.
Employees of the central government should keep a watch on announcements for the formation of the commission, its recommendations and time line for implementation.
Though the chart has now been worked out, the percentage and the implementation of the same will be finalized after the commission submits its report and the government accepts the recommendations.
As the commission’s work progresses, the 8th Pay Commission holds the potential to lift government employee and pensioner income and the associated consumption, as well as the overall economy.