The much-anticipated recommendations of the 8th Pay Commission may propose a lower-than-expected fitment factor if the central government decides to merge Dearness Allowance (DA) with the basic salary, according to employee union leaders closely involved in the ongoing deliberations.
While staff associations have been pushing for a fitment factor ranging between 2.57 and 2.86, sources suggest that this figure could be scaled down significantly if the merger of DA into the basic pay is approved. “If the DA is merged, it would automatically revise several allowances, which could lead to a lower fitment factor being proposed than the one currently speculated in public discussions,” a union leader told NDTV Profit on the condition of anonymity.
The fitment factor plays a key role in revising the pay structure of central government employees and pensioners. For instance, the 7th Pay Commission, implemented in 2016, had fixed the fitment factor at 2.57, leading to substantial increases in salaries and pensions at the time.
A senior representative of the National Council (Staff Side) of the Joint Consultative Machinery (NC-JCM) had earlier said that they would request the 8th Pay Commission to maintain or enhance this factor. However, insiders now say that the demand may be moderated if the government agrees to integrate DA with the basic pay.
Historically, under the 5th Pay Commission (1996–2006), DA was merged with basic pay when it exceeded 50%. This practice was last followed in 2004. The 6th Pay Commission discontinued this approach, and although the 7th Pay Commission recommended its reintroduction, the government did not act on the proposal.
Currently, after a 2% hike last week, the DA stands at 55% of the basic pay fixed by the 7th Pay Commission. If the government agrees to merge 50% of this DA with the basic pay, the minimum base salary could rise from ₹18,000 to ₹27,000 even before the new pay commission’s recommendations come into force.
Such a merger would also impact the fitment calculation, as the multiplication would then apply to the revised base pay, resulting in a more significant salary increment overall, even if the fitment factor itself is reduced.
Although the Ministry of Finance recently informed Parliament that it is not currently considering any proposal to merge DA with basic pay, union leaders believe the door is still open. “The ministry hasn’t ruled it out. They’ve just said it’s not under active consideration for now,” a union member pointed out.
They also referenced earlier positions held by the government—such as the denial of forming the 8th Pay Commission or alternatives to the National Pension System (NPS)—which were eventually reversed, as seen with the approval of the Unified Pension Scheme and the upcoming formation of the 8th Pay Commission.
The formal constitution of the 8th Pay Commission is expected shortly, after which it will begin consultations with various stakeholders before finalizing recommendations on salary structures, pensions, and other allowances.
