As lakhs of central government employees and pensioners are awaiting clarity on salary revisions as the 8th Pay Commission gets implemented soon, one question continues to be discussed among central government employees is whether the government would revise the annual increment rate.
The 8th Central Pay Commission is currently gathering stakeholder feedback, conducting meetings and expected to submit its report around 2027.
An illustrative comparison shows that if the annual increment were increased from the current 3 percent to 6 percent then an employee could get a significant boost in basic pay over ten years. The calculation is only an example and is based on the existing 7th Central Pay Commission pay matrix but it highlights how a higher annual increment can make a big difference over time.
Demand to hike annual increment
The central government employees are currently getting a 3 percent annual increment under the 7th Pay Commission. In their recommendations to the 8th Pay Commission, employee unions have asked for a hike from the current 3 percent to at least 6 percent annually. They argue that a 6 percent annual hike would lead to a significant rise in the salaries of the central government employees over time.
What have employee bodies recommended about increments?
The National Council of the Joint Consultative Machinery, the All India Defence Employees’ Federation and the Federation of National Postal Organisations have all suggested increasing the annual increment to 6 percent. The Indian Railways Supervisors’ Association demands the annual increment to be increased to 5 percent. The All India New Pension Scheme Employees Federation has recommended that the increment should go up to 7 percent annually.
Higher annual increment to benefit government employees
As per online report, calculations show how the pay of employees would be increased over the next 10 years if the 8th Pay Commission settles on a 2.1 fitment factor and raises the annual increment rate from 3 percent to 6 percent.
Basic pay – Level 1: Rs 18,000.00
Basic salary increased by a factor of 2.1: Rs 37,800.00
Total pay in 10 years: Rs 52,00,016 for annual salary at 3 percent and Rs 59,78,809 for annual salary at 6 percent
Extra pay in 10 years: Rs 7,78,793 for annual salary at 6 percent
Basic pay – Level 4: Rs 25,500.00
Basic salary increased by a factor of 2.1: Rs 53,550.00
Total pay in 10 years: Rs 73,66,689 for annual salary at 3 percent and Rs 84,69,979 for annual salary at 6 percent
Extra pay in 10 years: Rs 11,03,290 for annual salary at 6 percent
Basic pay – Level 6: Rs 35,400.00
Basic salary increased by a factor of 2.1: Rs 74,340.00
Total pay in 10 years: Rs 1,02,26,697 for annual salary at 3 percent and Rs 1,17,58,324 for annual salary at 6 percent
Extra pay in 10 years: Rs 15,31,626 for annual salary at 6 percent
Basic pay – Level 8: Rs 47,600.00
Basic salary increased by a factor of 2.1: Rs 99,960.00
Total pay in 10 years: Rs 1,37,51,153 for annual salary at 3 percent and Rs 1,58,10,627 for annual salary at 6 percent
Extra pay in 10 years: Rs 20,59,475 for annual salary at 6 percent
Note: These are only sample estimates based on assumed fitment factors and annual increment rates. The actual salary growth may be different.
Will there be hike in annual increment rate?
The comparison is only an example based on the current pay structure. Although the 8th Pay Commission has begun consultations, it has not indicated whether it will recommend increasing the annual increment rate. Whether the 8th CPC recommends a higher annual increment will become clear only after the commission completes its report and submits its recommendations to the government.
