About 50 lakh government employees and 65 lakh pensioners will be benefited under this commission.
The Modi government has made two important decisions for employees so far in its third term. The first decision was the “Unified Pension Scheme,” which provided a guaranteed pension. Now, the second decision was made yesterday, in which the government approved the 8th Pay Commission. After this decision, a committee will be formed, releasing a report on all the provisions and changes related to this pay commission. It is expected that this new pay commission will be implemented by 2026. However, there are three important questions related to this decision that need to be discussed: What will be the impact of the pay commission on the employees? How will it work as a booster for the Indian Economy? And how will the 8th Pay Commission be different from other commissions? After understanding these questions, the entire discussion related to this topic will be clear and meaningful.
Why is the Pay Commission brought?
The central government has approved the 8th Pay Commission, which aims to review the salaries and allowances of government employees and pensioners. About 50 lakh government employees and 65 lakh pensioners will be benefitted under this commission. If the figures of the state government are also included in it, then this number can exceed 2 crores. But the question arises as to why this commission is brought.
Since independence, the central government has constituted seven pay commissions. The main objective of these commissions has been to review the salaries, allowances, and pensions of government employees from time to time. Each commission is constituted at an interval of about 10 years so that necessary amendments can be made to the salary structure given inflation and economic conditions. The Pay Commission is a government body that reviews the structure of salaries, allowances, and other benefits of central employees and pensioners. This process is important so that government employees can be ensured a fair and equitable income, which aligns with their work and contribution.
What changes can come from the 8th Pay Commission?
Many important changes are expected under this Pay Commission, which can benefit government employees and pensioners. First of all, the impact of the salary increase can be seen. It is estimated that after the implementation of the 8th Pay Commission, the minimum salary of government employees can be between ₹40,000 to ₹45,000, while currently it is around ₹18,000. Additionally, pensioners will also benefit from this pay commission. The pension amount will also increase, strengthening pensioners’ financial position. Revision in dearness allowance will also increase the total salary of the employees, as dearness allowance is directly linked to the basic salary of the employees. However, the dearness allowance is zero with the implementation of the pay commission, but it is revised afterward, further increasing the employee’s salary.
What will be the impact of the 8th Pay Commission on the economy?
The impact of the 8th Pay Commission will be directly on the country’s economy. The increase in the salary of government employees will not only increase their personal purchasing power but will also increase consumption spending. The increased purchasing power of employees will boost demand in the economy, leading to a rise in demand for goods and services in the market. Additionally, the salary hike will increase the spending capacity of consumers, which will also improve the government’s tax collection. Thus, this hike will contribute to the government’s revenue in both direct and indirect taxes. When government employees get a decent salary, their morale will also increase. This will result in improved efficiency and productivity, improving the quality of government services.
How will the 8th Pay Commission be different from other commissions?
The difference between pay commissions is visible, and these changes play a significant role in affecting the financial condition of government employees. For example, the minimum salary in the 7th Pay Commission was ₹18,000, while in the 6th Pay Commission, it was only ₹7,000. Apart from this, there was also a variation in the ‘fitment factor.’ The fitment factor is the multiplier used to calculate the basic pay and other allowances of government employees. This factor is determined to convert the current salary of the employees to the new pay structure. The fitment factor in the 7th Pay Commission was 2.57, while in the 6th, it was 1.86. Now, there are possibilities of increasing the fitment factor to 2.8 in the 8th Pay Commission. If implemented, an employee earning ₹50,000 monthly salary can increase to ₹1.4 lakh.
However, its implementation will also raise some concerns, which the government must resolve. The salary hike will increase the money supply in the economy, which may lead to a rise in inflation due to the sudden increase in demand. Moreover, The government will need more revenue to meet salary payments as per the 8th pay commission, raising a fiscal concern. Nevertheless, the recommendations of the 8th Pay Commission will be a relief for government employees and pensioners. It will not only improve their financial condition but will also give a boost to the economy. However, the government will have to adopt appropriate strategies in parallel to deal with the potential challenges that may arise due to this.
