8th Pay Commission: Can salaries rise by over 60%? Here’s how HRA, TA & DA proposals may boost pay for level 1 payments
The possibility of a major salary hike under the 8th Pay Commission has generated interest among central government employees and pensioners. There are expectations in some corners of a possible 60% hike in payments, once the recommendations of the 8th Pay Commission are implemented.
The projected increase is not driven solely by how high the fitment factor can be pushed. Instead, the projected increase results from a combination of factors and an illustrative calculation that combines higher basic pay with revisions to the House Rent Allowance (HRA), Transport Allowance (TA) and the treatment of the Dearness Allowance (DA).
For example, several employee organisations and unions, such as the All India National Public Sector Employees Federation (AINPSEF), have submitted proposals to increase the salary of a Level 1 employee in an X-category city from around ₹37,080 to about ₹61,344. Thus implying an overall increase of about 63-65%.
These figures are recommendations based on the views shared by prominent unions. They are not the final positions of the government or the 8th Pay Commission; in fact, a decision on these aspects is only possible once the Commission submits its recommendations to the Centre.
Core reason for the projected hike above 60%
In the above case, as touched upon by AINPSEF, a significantly higher revision to the fitment factor alone does not explain the projections. This is because once the basic pay is revised, allowances linked to it, such as HRA, also increase. Along with this, the employee bodies have also proposed a higher transport allowance and requested that the Dearness Allowance be merged with basic pay before the new pay scales are decided and implemented across pay structures. It is the combined impact of these proposals that eventually results in much higher estimated salary payments.
X, Y and Z cities
To decide HRAs, the central government has classified cities into X, Y and Z categories. This division includes major metropolitan centres such as Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad and Pune. Due to the higher cost of living in these cities, they attract the highest HRAs. Y cities, on the other hand, comprise other large urban centres, whereas the remaining cities and towns fall in the Z category.
Currently, HRA is paid at 30%, 20% and 10% of basic pay for employees posted in X, Y and Z cities, respectively. AINPSEF has proposed increasing these rates to 36%, 24% and 12% under the 8th Pay Commission, respectively.
|
Component |
How it boosts salary |
|---|---|
| Revised Basic Pay | Raises the base for salary revision. |
| HRA | Increases automatically as it is linked to basic pay. |
| Transport Allowance | A higher allowance directly boosts monthly earnings. |
| DA Merger | If merged with basic pay, it increases the salary base before revision. |
| Overall Impact | Together, these proposals could result in an illustrative salary increase of over 60%. |
Explaining the projections, Adhil Shetty, CEO, BankBazaar, says, “The projected increase of over 60% is based on a combination of assumptions rather than the fitment factor alone. While the revised basic pay is the primary driver, allowances such as HRA and transport allowance are also linked to basic pay, so any increase in the base can raise the overall salary package.”
He added, “However, these estimates depend on multiple variables, including the final fitment factor, the treatment of Dearness Allowance and the revised allowance structure. Until the 8th Pay Commission submits its recommendations and the government announces its decision, these figures should be viewed as indicative rather than definitive.”
Bottom line
The much-discussed 60%-plus salary hike is an illustrative example, not a confirmed revision. Whether employees receive such an increase will depend on the 8th Pay Commission’s final recommendations and the Central Government’s decision on the fitment factor, HRA, TA and DA-related proposals.
With the meeting in Odisha concluding yesterday and the meetings in West Bengal starting tomorrow, these aspects are likely to be highlighted in discussions among employee unions, associations and stakeholders.
For more details, clarifications and updates on the most recent developments related to the 8th Pay Commission, visit: https://8cpc.gov.in/
