Big Boost For Central Govt Employees: 8th Pay Commission Could Deliver 30-34% Salary Hike, Says Ambit Capital

Central government employees and pensioners could be in for a significant salary and pension boost soon. According to Ambit Capital, the upcoming 8th Pay Commission is expected to propose a massive 30-34% increase in effective take-home pay - more than double the 14.3% hike implemented under the 7th Pay Commission.

The 8th Pay Commission, though not yet officially constituted, is likely to be rolled out in the financial year 2026-27 (FY27). Once implemented, this revision is estimated to cost the government approximately Rs 1.8 lakh crore annually - significantly more than the Rs 1.02 lakh crore incurred during the 7th Pay Commission rollout in FY17.

What's Behind the Big Hike?

The key driver behind this anticipated jump is the fitment factor, a multiplier used to calculate revised salaries. While the 7th Pay Commission had a fitment factor of 2.57, Ambit Capital's projections suggest a higher number this time around.

One crucial detail: When a new Pay Commission takes effect, the Dearness Allowance (DA) - which currently stands at 55% of the basic salary - is reset to zero. This means the starting point for salary calculation is recalibrated, even if the nominal basic pay rises significantly.

For context, under the 6th Pay Commission, a basic pay of Rs 7,000 translated to a take-home salary of Rs15,750. The 7th Pay Commission raised the basic pay to Rs 18,000, but the effective hike was just 14.3% due to the DA reset. Including allowances, the total increase was about 23%.

This time, Ambit expects the effective hike to be much more substantial, signalling a possible total compensation jump exceeding 30%.

What's Next?

Although the government has yet to form the 8th Pay Commission panel, the process typically spans 18-24 months from constitution to report submission. If formed soon, the implementation could align with FY27, in keeping with the 10-year cycle observed for previous commissions.

In the meantime, central government employees continue to receive biannual DA hikes to offset inflation.