The Indian government is gearing up for a landmark revision in the salary structure of central government employees with the official formation of the 8th Central Pay Commission (CPC). One of the most significant proposals under consideration is the merging of pay scales for Levels 1 to 6, aimed at addressing pay stagnation and improving career progression.
With over 1.2 crore central employees and pensioners relying on periodic salary revisions, the upcoming pay commission is expected to bring financial relief, structural reforms, and greater growth opportunities across sectors.
8th Pay Commission – Key Highlights
| Proposal | Details |
|---|---|
| Pay Scale Merger | Rationalization of Levels 1 to 6 to streamline salary progression |
| Minimum Salary Increase | Possible hike for Level 1 employees |
| Fitment Factor Revision | Proposed increase to 2.86 |
| DA/DR Integration | Merger with basic pay for both employees and pensioners |
| Estimated Beneficiaries | 50 lakh employees + 65 lakh pensioners |
| Current Status | Cabinet approval granted; ToR drafting underway |
Government Approval
On January 16, 2025, the Union Cabinet, chaired by Prime Minister Narendra Modi, gave its nod for the formation of the 8th Central Pay Commission. This green signal sets the stage for a comprehensive salary overhaul and the establishment of a three-member commission including a chairperson and two experts.
The government is currently finalizing the Terms of Reference (ToR) with inputs from key stakeholders like employee unions and administrative bodies.
Recommendations by the National Council (JCM Staff Side)
The Joint Consultative Machinery (JCM) has laid out detailed proposals to bring fairness and uniformity in pay structures:
1. Merging of Pay Scales for Levels 1–6
The current system has 18 pay levels, starting at ₹18,000 and going up to ₹2,50,000. The proposed merger focuses on the bottom six levels, aiming to fix progression delays and provide structured career growth.
| Current Pay Levels | Proposed Merged Levels | Expected New Salary (Approx.) |
|---|---|---|
| Level 1 (₹18,000) & Level 2 (₹19,900) | Combined | ₹51,480 |
| Level 3 (₹21,700) & Level 4 (₹25,500) | Combined | ₹72,930 |
| Level 5 (₹29,200) & Level 6 (₹35,400) | Combined | ₹1,01,244 |
Note: Calculated using a proposed fitment factor of 2.86
2. Enhanced Fitment Factor
A fitment factor of 2.86 has been suggested to boost the basic salary across merged levels. This ensures fair compensation for lower-level employees while maintaining a healthy pay hierarchy.
3. Merger of Dearness Allowance (DA) & Dearness Relief (DR)
To counter inflation and simplify salary structure, the integration of DA for employees and DR for pensioners into the basic pay has been proposed. This would:
- Increase take-home salary
- Improve retirement benefits
- Provide more predictable pay structures
Expected Impact of the 8th Pay Commission
| Area of Impact | Benefits |
|---|---|
| Career Growth | Smoother progression, fewer levels, faster promotions |
| Pay Equity | Reduced disparities, especially at entry-level positions |
| Pension Benefits | Enhanced pensions with DA/DR merged into base pay |
| Employee Morale | Greater job satisfaction due to fairer structures and higher take-home pay |
What’s Next?
- Standing Committee Meeting: The JCM Staff Side has requested a meeting before ToR finalization.
- Formation of Commission: A three-member panel will be constituted in April 2025.
- Timeline: The 8th Pay Commission is expected to submit its final report within 12 months from formation.
- Implementation: Post review and cabinet approval, new pay structures will benefit over 1.2 crore employees and pensioners.
Conclusion
The 8th Pay Commission brings the promise of structural reforms, equitable salaries, and better career progression for India’s central government employees. If approved, the merging of pay levels and DA integration will significantly boost both employee income and retirement security. As the government works towards finalizing the ToR and appointing the commission, employees and pensioners across India await with high hopes.
FAQs
When will the 8th Pay Commission be implemented?
The commission is expected to be formed by mid-2025 and will take around 12 months to finalize its report. Implementation could follow in 2026.
What does the merging of pay levels mean?
It means combining similar pay bands (Levels 1–6) to simplify the pay structure and enhance career progression.
How will the proposed fitment factor affect salaries?
A fitment factor of 2.86 could significantly increase basic pay, especially for lower pay levels.
Will pensioners also benefit from this commission?
Yes, pensioners will benefit through DA/DR integration into their basic pension, improving overall payouts.
Is the DA merger into basic pay confirmed?
It is part of the proposal, but final confirmation will come once the commission submits its recommendations and they’re approved.