8th CPC: What is fitment factor and how is it calculated? Understand with examples

The Union Cabinet approved the constitution of the 8th Pay Commission to revise the salaries of central government employees and pensioners earlier this year, and it is expected to be implemented by January 2026.

What is the 8th Pay Commission?

The government-announced 8th Pay Commission will evaluate the present pay structure for central government employees. Before the 8th Pay Commission, the 7th Pay Commission replaced the grade pay system with levels and implemented a structured pay matrix. Employee compensation in the central government has undergone significant changes over time.

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The fitment factor will be applied to the present basic pay to compute the updated basic salary.

What is a fitment factor?

Fitment factor is used to revise salaries, pensions, and allowances under a new pay commission. It is set by considering various factors like inflation, employee needs, and government affordability.

How the fitment factor is calculated

It is calculated using factors like cost of living, inflation, and economic conditions. For example, the last pay commission (7th Pay Commission) used a fitment factor of 2.57. This means the new basic pay under the 7th Pay Commission was 2.57 times the old basic pay.

Understand with calculations
Existing Basic Pay (6th CPC): Rs 17,000
Fitment Factor (7th CPC): 2.57
Revised Basic Pay (7th CPC): Rs 17,000 x 2.57 = Rs 43,690 (approximately)

8th Pay Commission fitment factor

According to Ambit Capital, the fitment factor can be expected to be within the broad range of 1.83 to 2.46.

This means, if your current basic pay is Rs 20,000 under the 7th Pay Commission, then it will be around Rs 36,600 (Rs 20,0000x1.83) after the 8th Pay Commission is implemented. If the fitment factor is 2.46, then the central government employees' revised basic pay will be around Rs 49,200 (Rs 20,000x2.46), as per the calculations.

FAQs

When will the 8th Pay Commission be announced?

There has been no official announcement yet.

How to calculate fitment factor?

It is calculated using factors like cost of living, inflation, and economic conditions.

What could the fitment factor be?
According to Ambit Capital, it could be between 1.83 and 2.46.

Will this impact the government budget?
Yes, there could be a significant burden of Rs 1.8 lakh crore to Rs 3.2 lakh crore.