8th Pay Commission: How 6% annual increment may add Rs 20 lakh to Level 8 employees' basic pay in 10 years

Central government employees currently receive a 3% annual increment under the 7^th Pay Commission. In their recommendations to the 8^th Pay Commission, employee groups have asked for a significant increase in this 3% increment. They argue that a 3% annual salary hike is insufficient as the basic salary doesn’t even double over a decade. These employee groups are pushing for an at least 5% hike annually.

They argue that a 5% annual raise, along with merging the dearness allowance (DA) with basic pay once the DA hits 25%, could substantially boost the salaries of the central government employees.

According to Bankbazaar, if the 8^th Pay Commission opts for a 2.1 fitment factor and raises the annual increment rate from 3% to 6%, Level 1-8 employees could see an additional Rs 20.59 lakh in basic pay over 10 years.


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What central government employee bodies have recommended about annual increment?

The National Council of the Joint Consultative Machinery (NC-JCM), the main central government employee body in India, in its memorandum submitted to the 8^th Pay Commission, has suggested increasing the annual increment to 6%.

The All India Defence Employees’ Federation (AIDEF), the body that represents defence civilian employees, and the Federation of National Postal Organisations (FNPO) have also suggested increasing the annual increment to 6%.

On the other hand, the All India New Pension Scheme Employees Federation (AINPSEF) has recommended that the increment should be 7% annually. The Indian Railways Supervisors’ Association (IRTSA) wants the annual increment to go up to 5%.

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Employee bodies’ recommendations for annual increment from 8^th Pay Commission

Organisation	Proposed Annual Increment
National Council of the Joint Consultative Machinery (NC-JCM)	6%
All India Defence Employees' Federation (AIDEF)	6%
Federation of National Postal Organisations (FNPO)	6%
All India New Pension Scheme Employees Federation (AINPSEF)	7%
Indian Railways' Supervisors' Association (IRTSA)	5%

Source: Official memorandum submitted to 8^th Pay Commission

How higher annual increment can benefit central government employees

Bankbazaar in its calculations for Level 1, 4, 6 and 8 employees show how they may get up to Rs 20.56 extra basic pay in 10 years if the 8^th Pay Commission settles on a 2.1 fitment factor and decides to increase the annual increment rate from 3% to 6%.

For Level 1 employees, salary benefit in 10 years at 3% vs 6% annual pay increment

Basic pay - Level 4	₹ 18,000.00
Revised basic @ x2.1	₹ 37,800.00

Year	Monthly Basic (with 3% Increment)	Annual Salary (3%)	Monthly Basic (with 6% Increment)	Annual Salary (6%)
1	₹ 37,800	₹ 4,53,600	₹ 37,800	₹ 4,53,600
2	₹ 38,934	₹ 4,67,208	₹ 40,068	₹ 4,80,816
3	₹ 40,102	₹ 4,81,224	₹ 42,472	₹ 5,09,665
4	₹ 41,305	₹ 4,95,661	₹ 45,020	₹ 5,40,245
5	₹ 42,544	₹ 5,10,531	₹ 47,722	₹ 5,72,660
6	₹ 43,821	₹ 5,25,847	₹ 50,585	₹ 6,07,019
7	₹ 45,135	₹ 5,41,622	₹ 53,620	₹ 6,43,440
8	₹ 46,489	₹ 5,57,871	₹ 56,837	₹ 6,82,047
9	₹ 47,884	₹ 5,74,607	₹ 60,247	₹ 7,22,969
10	₹ 49,320	₹ 5,91,845	₹ 63,862	₹ 7,66,348
Total pay in 10 years		₹ 52,00,016		₹ 59,78,809
Extra pay in 10 years				₹ 7,78,793

In the calculations, you can see that even a Level 1 employee can earn nearly Rs 7.79 lakh extra basic pay in 10 years if the fitment factor is 2.1 and the annual salary increment in 6% instead of 3%.

For Level 4 employees, salary benefit in 10 years at 3% vs 6% annual pay increment

Basic pay - Level 4	₹ 25,500.00
Revised basic @ x2.1	₹ 53,550.00

Year	Monthly Basic (with 3% Increment)	Annual Salary (3%)	Monthly Basic (with 6% Increment)	Annual Salary (6%)
1	₹ 53,550	₹ 6,42,600	₹ 53,550	₹ 6,42,600
2	₹ 55,157	₹ 6,61,878	₹ 56,763	₹ 6,81,156
3	₹ 56,811	₹ 6,81,734	₹ 60,169	₹ 7,22,025
4	₹ 58,516	₹ 7,02,186	₹ 63,779	₹ 7,65,347
5	₹ 60,271	₹ 7,23,252	₹ 67,606	₹ 8,11,268
6	₹ 62,079	₹ 7,44,950	₹ 71,662	₹ 8,59,944
7	₹ 63,942	₹ 7,67,298	₹ 75,962	₹ 9,11,540
8	₹ 65,860	₹ 7,90,317	₹ 80,519	₹ 9,66,233
9	₹ 67,836	₹ 8,14,026	₹ 85,351	₹ 10,24,207
10	₹ 69,871	₹ 8,38,447	₹ 90,472	₹ 10,85,659
Total pay in 10 years		₹ 73,66,689		₹ 84,69,979
Extra pay in 10 years				₹ 11,03,290

Source: Bankbazaar
Note: Illustrative estimates based on assumed fitment factors and annual increment rates. Actual pay progression may differ.

With a rise in basic pay, the 10-year salary benefit can be higher for higher levels of employees. Like a Level 4 employee may get up to Rs 11.04 lakh extra basic pay in 10 years.

For Level 6 employees, salary benefit in 10 years at 3% vs 6% annual pay increment

Current basic - Level 6	₹ 35,400.00
Revised basic @ x2.1	₹ 74,340.00

Year	Monthly Basic (with 3% Increment)	Annual Salary (3%)	Monthly Basic (with 6% Increment)	Annual Salary (6%)
1	₹ 74,340	₹ 8,92,080	₹ 74,340	₹ 8,92,080
2	₹ 76,570	₹ 9,18,842	₹ 78,800	₹ 9,45,605
3	₹ 78,867	₹ 9,46,408	₹ 83,528	₹ 10,02,341
4	₹ 81,233	₹ 9,74,800	₹ 88,540	₹ 10,62,482
5	₹ 83,670	₹ 10,04,044	₹ 93,853	₹ 11,26,230
6	₹ 86,180	₹ 10,34,165	₹ 99,484	₹ 11,93,804
7	₹ 88,766	₹ 10,65,190	₹ 1,05,453	₹ 12,65,433
8	₹ 91,429	₹ 10,97,146	₹ 1,11,780	₹ 13,41,358
9	₹ 94,172	₹ 11,30,060	₹ 1,18,487	₹ 14,21,840
10	₹ 96,997	₹ 11,63,962	₹ 1,25,596	₹ 15,07,150
Total pay in 10 years		₹ 1,02,26,697		₹ 1,17,58,324
Extra pay in 10 years				₹ 15,31,626

Source: Bankbazaar

For Level 8 employees, salary benefit in 10 years at 3% vs 6% annual pay increment

Basic Pay - Level 8	₹ 47,600.00
Revised basic @ x2.1	₹ 99,960.00

Year	Monthly Basic (with 3% Increment)	Annual Salary (3%)	Monthly Basic (with 6% Increment)	Annual Salary (6%)
1	₹ 99,960	₹ 11,99,520	₹ 99,960	₹ 11,99,520
2	₹ 1,02,959	₹ 12,35,506	₹ 1,05,958	₹ 12,71,491
3	₹ 1,06,048	₹ 12,72,571	₹ 1,12,315	₹ 13,47,781
4	₹ 1,09,229	₹ 13,10,748	₹ 1,19,054	₹ 14,28,648
5	₹ 1,12,506	₹ 13,50,070	₹ 1,26,197	₹ 15,14,366
6	₹ 1,15,881	₹ 13,90,572	₹ 1,33,769	₹ 16,05,228
7	₹ 1,19,357	₹ 14,32,290	₹ 1,41,795	₹ 17,01,542
8	₹ 1,22,938	₹ 14,75,258	₹ 1,50,303	₹ 18,03,635
9	₹ 1,26,626	₹ 15,19,516	₹ 1,59,321	₹ 19,11,853
10	₹ 1,30,425	₹ 15,65,102	₹ 1,68,880	₹ 20,26,564
Total pay in 10 years		₹ 1,37,51,153		₹ 1,58,10,627
Extra pay in 10 years				₹ 20,59,475

Source: Bankbazaar

A Level 8 employee may get up to Rs 20.60 lakh extra total basic salary in 10 years at a 2.1 fitment factor and a 6% annual increment. The salary benefit can be higher if the fitment factor is higher than 2.1.
Assumptions for annual increment calculations

Basic salary= As per 7^th Pay Commission
Revised salary - Basic pay x fitment factor (2.1)
Annual increment (at 3%) of revised basic pay
Total salary in 10 years (at 3% increment)
Annual increment (at 6%) of revised basic pay
Total salary in 10 years (at 6% increment)
Extra salary in 10 years = (Total pay in 10 years at 6% annual increment) - (Total pay in 10 years pay at 3% annual increment)