8th Pay Commission: Govt gets proposal for hike in DA, basic pay, pension | Economy & Policy News

The central government has been requested to set up the 8th Pay Commission to review and update basic salary, allowances, pensions, and additional benefits for central government employees and pensioners.

Gopal Mishra, secretary of the National Council (Staff Side, Joint Consultative Machinery for Central Government Employees), wrote a letter to Cabinet Secretary Rajiv Gauba about the reasons for forming the 8th Pay Commission.

Pay commission

Constituted every 10 years, the commission reviews the salary framework, allowances, and benefits of central government employees. It proposes necessary adjustments, considering external factors such as inflation. The 7th Pay Commission, initiated by former Prime Minister Manmohan Singh on February 28, 2014, concluded its report on November 19, 2015. Subsequently, its recommendations were implemented starting January 1, 2016.

The 8th Central Pay Commission is expected to take effect from January 1, 2026, but the government is yet to declare its formation.

Urgent need for 8th Pay Commission

Mishra said that previously, the government stated that inflation ranged between 4 per cent and 7 per cent, with an average expected around 5.5 per cent.

“The post-Covid-19 inflation is higher than pre-Covid-19 levels. If we compare the retail prices of essential commodities and goods which are required for daily life, from 2016 to 2023, they have increased by over 80 per cent as per the local market, but we were provided only around 46 per cent Dearness Allowance (DA), as of July 1, 2023. Hence, there is a gap between the actual price rise and DA provided to the employees and pensioners.”

He further said that the revenue of the central government has doubled from 2015 to 2023, according to the budget statements, indicating a significant rise in revenue collection. Specifically, the central government’s actual revenue has increased by more than 100 per cent, Mishra said.

“Hence, the central government has more paying capacity compared to the year 2016. The GST collection has also increased in April 2023, as the government collected Rs 1.87 trillion,” Mishra said.

Furthermore, there has been a significant decline in the number of central government employees over the past decade, resulting in around 1 million vacant positions, he said in this letter.

He said, “The actual expenses for wages (salary) and allowances are only 7.29 per cent of the total revenue expenditure for the central government employees for the year 2020-21. In respect of pensioners the actual expenses on pension is around 4 per cent of the total revenue expenditure.”

Regular reviews

Mishra suggested regular reviews of the pay matrix using the Aykroyd formula, which takes into account changes in prices of essential goods for the average consumer. This method, assessed by the Labour Bureau in Shimla, aims to enable more frequent adjustments instead of waiting for a decade.

Pension and NPS

Despite the DA rising to 50 per cent from January 1, 2024, there has been no decision to reinstate the Pension under CCS (Pension) Rules, 1972 (now 2021) for those recruited after January 1, 2004.

Mishra pointed out that more than 2 million civilian central government employees are contributing 10 per cent of their basic pay and DA to the National Pension System (NPS), impacting their net take-home pay.

In his letter, Mishra said, “Considering all the above aspects and today’s requirement of life and also to attract qualified and talented candidates to the government service time has now come to immediately constitute the 8th Central Pay Commission and to revise the pay scales/allowances/pension and other benefits of the central government employees through mutual discussions and settlements.”

First Published: Jun 19 2024 | 12:55 PM IST