8th Pay Commission is set to bring significant changes to the salary structure of over one crore central government employees and pensioners.
Expected to be implemented by January 1, 2026, the commission will revise salaries, pensions, and allowances, directly benefiting 50 lakh employees and 65 lakh pensioners.
Over the years, the salary calculation system has evolved through three major structural reforms—Grade Pay, Pay Bands, and the Pay Matrix.
Each of these frameworks has played a crucial role in shaping how government salaries are determined.
Additionally, the fitment factor, which adjusts basic pay, has undergone multiple revisions, impacting salary hikes across different pay commissions.
Grade Pay System (6th Pay Commission, 2006)
Before the 6th Pay Commission, India had over 4,000 disparate pay scales, leading to inconsistencies in salary structures.
The government introduced the Grade Pay system to streamline pay scales and establish a hierarchical structure within government jobs.
- The 6th CPC collapsed multiple pay scales into four Pay Bands (PB-1 to PB-4).
- Grade Pay (GP) was introduced to determine seniority within pay bands.
- A uniform 1.86x multiplier was applied to Basic Pay + Dearness Allowance (DA) to place employees in new pay bands.
For example, an Under Secretary earning ₹10,000 and a Section Officer earning ₹12,000 had no logical salary hierarchy.
The 6th CPC placed them in PB-3 (₹15,600–39,100) with Grade Pay ₹6,600, ensuring structured pay progression.
Pay Bands and Their Limitations
While Pay Bands helped consolidate salary structures, they also created anomalies.
Senior employees often found themselves earning less than juniors due to overlapping pay bands.
This led to promotion-related discrepancies, prompting the need for a more refined system.
Pay Matrix System (7th Pay Commission, 2016)
The 7th Pay Commission introduced the Pay Matrix, replacing the Pay Bands + Grade Pay system.
This new framework aimed to eliminate salary overlaps and ensure transparent career progression.
- The Pay Matrix consists of 24 levels, each representing a unique salary structure.
- Vertical movement corresponds to promotions, while horizontal movement accounts for annual increments.
- The government revised the fitment factor to 2.57x, ensuring a uniform salary hike across all levels.
For instance, an employee with a pre-revised salary of ₹25,400 (₹20,000 basic pay + ₹5,400 grade pay) saw their salary increase to ₹65,278 under the 7th CPC (Level 6).
Fitment Factor Evolution Across Pay Commissions
The fitment factor plays a crucial role in determining salary hikes. Here’s how it has evolved:
- 5th CPC (1997) – Introduced the first formal fitment factor (1.38x), applied after merging DA with basic pay.
- 6th CPC (2006) – Fixed the fitment factor at 1.86x.
- 7th CPC (2016) – Increased the fitment factor to 2.57x, aiming to offset inflation since 2006.
- 8th CPC (Expected 2026) – Anticipated fitment factor between 2.5x and 2.8x, potentially increasing salaries to ₹40,000–₹45,000.
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