8th Pay commission update
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8th Pay Commission: Proposal submitted to the Central Govt

After the Central government received the proposal letter in June 2024, employees and pensioners of the Central Government eagerly awaited an announcement about the 8th Central Pay Commission in the upcoming budget. This commission promises several benefits, including revised pay scales and improved retirement benefits for government employees, military personnel, and pensioners.

The 8th Pay Commission aims to address salary differences among various employee groups and reduce the impact of inflation. In this article, we will discuss the 8th pay commission proposal, the implementation date and its recommendations, so keep reading this article.

8th pay commission Proposal

The 8th Pay Commission's proposal has been submitted to the Indian government. This has sparked anticipation among central government employees and pensioners. The commission aims to review and enhance the basic pay, allowances, and pensions. Speculation suggests that the minimum salary could rise from Rs 18,000 to Rs 26,000, reflecting a proposed fitment factor of 3.68 times.

The commission's goal is to bridge salary disparities and better counter the impact of inflation, which has surged post-COVID. Employee groups are also pushing for the reinstatement of the old pension scheme and advocating for more frequent reviews of the pay matrix to ensure timely adjustments to keep pace with inflation. Many see this proposal as a crucial step towards improving the financial well-being of central government employees and pensioners.

8th pay commission recommendations 

Shiva Gopal Mishra, Secretary of National Council (Staff Side) Joint Consultation of Machinery for Central Government Employees, has submitted a proposal regarding the 8th pay commission, to the government for reviewing the basic pay, allowances, pension, and other benefits of central government employees and pensioners. Here are some recommendations proposed by SG Mishra.

Inflation and Dearness Allowance Discrepancy

Mishra highlighted that post-COVID inflation rates have exceeded pre-pandemic levels, with essential goods' prices rising over 80% from 2016 to 2023. However, employees and pensioners only received a 46% increase in Dearness Allowance (DA) by mid-2023. This disparity between actual price rises and DA adjustments underscores a growing financial gap for central government employees.

Government Revenue Growth

From 2015 to 2023, the central government's revenue doubled, supported by significant increases in GST and income tax collections. In April 2023 alone, GST collections reached Rs 1.87 lakh crores. The personal income tax collection for FY 2022-23 showed a 24.23% growth, amounting to Rs 9,60,764 crore. Despite this, the number of central government employees has decreased, resulting in increased workloads for current staff.

Call for Periodic Pay Matrix Review

Mishra advocated for regular reviews of the pay matrix based on the Aykroyd formula, which adjusts for changes in the cost of essential commodities. This would prevent the need for waiting ten years for pay revisions, ensuring timely adjustments aligned with inflation rates.

Scraping NPS, and Restoring Old Pension Scheme

Old Pension scheme

The letter also addressed the ongoing demand to scrap the National Pension System (NPS) and restore the old pension scheme for employees recruited after January 1, 2004. Currently, over 20 lakh employees contribute 10% of their basic pay and DA to the NPS, reducing their take-home pay significantly.

Attract Qualified and Talented Candidates

Given the increased cost of living and the need to attract talented candidates to government service, there is a pressing demand to establish the 8th Central Pay Commission immediately. This commission would revise pay scales, allowances, pensions, and other benefits through mutual discussions and settlements. 

The letter concluded with a strong appeal for the immediate constitution of the 8th Central Pay Commission to address these critical issues.

Benefits of 8th Pay Commission 

Here are the anticipated benefits of the 8th Pay Commission that are expected to have positive effects on both government employees and the Indian economy:

  • Increased Salaries: The proposal includes a projected increase of 20% to 35% in basic salaries for central government employees, aiming to enhance their take-home pay, living standards, and financial stability.
  • Enhanced Allowances: Adjustments to allowances such as House Rent Allowance (HRA), Transport Allowance (TA), and Dearness Allowance (DA) are likely to be made to keep pace with inflation and changing living costs.
  • Boost in Consumer Spending: With higher disposable incomes, government employees may increase their expenditures, potentially stimulating economic growth through heightened demand for goods and services.
  • Improved Retirement Benefits: An expected increase of up to 30% in pensions aims to provide better financial security for retirees.
  • Increased Tax Revenues: The rise in salaries is anticipated to lead to greater tax revenues for the government.
  • Reduced Financial Stress: Improved financial stability among employees could promote social stability and lessen dependence on social welfare programs.
  • Enhanced Talent Attraction and Retention: Competitive compensation packages could enhance the appeal of government jobs to skilled professionals, facilitating the recruitment and retention of talent.

Conclusion

The proposal for the 8th Central Pay Commission highlights critical financial challenges faced by central government employees and pensioners due to post-COVID inflation. Despite increased government revenue and tax collections, the current Dearness Allowance is insufficient to cover rising costs, and the workforce has shrunk, adding pressure on existing employees. Immediate establishment of the 8th Pay Commission is essential to ensure timely revisions of pay scales, allowances, and pensions, and to attract qualified candidates to government service.

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