Trade Unions' Demands to the 8th Departmental Commission: Proposals for Housing and Transport Allowances

The increase in the basic salary of civil servants affects not only the monthly earnings. The higher the basic salary, the greater its impact on annual increments, Dearness Allowance (DA), House Rent Allowance (HRA), and retirement benefits. This is why the issue of increasing the minimum basic salary and changing the annual increment rate was acutely raised before the 8th Departmental Council.

Union representatives proposed setting the minimum basic salary in the range of ₹69,000 to ₹72,000. However, these proposals have not yet received official approval.

The 8th Departmental Council held consultations with trade unions and other stakeholders on October 22 and 23, 2026, in Mumbai. A previous commission meeting took place on October 8 in Bangalore. Civil servants, pensioners, and trade unions continue to await decisions regarding new salaries, allowances, and pension provisions. In recent months, unions have brought issues such as the fitment factor, minimum basic salary, allowances, pension reforms, leave compensation, and employee morale before the commission. Special attention is being paid to increasing the basic salary, as this can affect an employee's total income throughout their career.

Unions presented various proposals to the 8th Departmental Council regarding the minimum basic salary and the fitment factor. The National Confederation of Joint Consultative Mechanisms (NC-JCM) on behalf of personnel requested a minimum basic salary of ₹69,000 and a fitment factor of 3.833. The Indian Military Technical Workers Association (BPMS) proposed a minimum basic salary of ₹72,000 and a fitment factor of 4. Both organizations cited rising inflation as the main reason for their demands. Both associations are also pushing for an increase in the current annual increment rate from 3% to 6%, arguing that this will help employees cope with inflation and increase their income. It is important to remember that the amounts of ₹69,000 and ₹72,000 are currently just proposals that the 8th Departmental Council has not finally approved.

The basic salary is the main component of a civil servant's pay, and it does not include Dearness Allowance, House Rent Allowance, or other payments. According to existing rules, the basic salary plays a key role in calculating allowances such as DA and HRA. The impact of the basic salary is felt long-term. Under the 7th Departmental Council, the annual increment is 3%. Consequently, if an employee's starting basic salary is higher, their annual increment may also be larger. This means that the higher the initial basic salary, the more positive the impact it will have on future salary.

The benefit of the basic salary can be illustrated with an example. If two employees start with different basic salaries and are subject to the same increment rate, the employee with the higher basic salary will receive a larger annual increment amount. For instance, at a 3% rate, the annual increment on a basic salary of ₹50,000 will be ₹1,500, whereas on a basic salary of ₹70,000, the same increment will be ₹2,100. Thus, the difference in the initial basic salary leads to differences in the increment amount over time, and this gap will only widen.

The consequences of increasing the basic salary are not limited to monthly remuneration. Since payments such as Dearness Allowance and House Rent Allowance are linked to the basic salary, an increase in the basic salary can lead to an increase in these allowances according to established rules. Furthermore, it may affect certain retirement benefits, including pension, dependent allowance, and leave encashment. The calculation of these payments is done according to relevant service rules and prevailing regulations, so a higher adjusted basic salary may result in an increase in these benefits.

The 8th Departmental Council was formed on November 3, 2025, and its chairman is the distinguished Supreme Court Judge Ranjan Prakash Desai. Members of the commission also include Professor Pulak Ghosh and IAS Pankaj Jain. The commission is required to submit its report within 18 months of its formation. Based on this timeframe, the report is expected to appear around May-June 2027, although this date cannot be considered final. Currently, the commission is reviewing proposals from trade unions and other parties. Precise changes in the minimum basic salary, fitment factor, and annual increment will only become clear after the commission's recommendations and subsequent government approval. Official information related to the 8th Departmental Council can be found on the website 8cpc.gov.in.

Central employees and pensioners are expecting significant increases in salaries and pensions as a result of the work of the 8th Departmental Commission (8th Pay Commission). However, the commission's task goes beyond simply increasing salaries; it must take into account the state of public finances, inflation levels, and pension expenditure.

After waiting for about ten months, the government approved the Terms of Reference (ToR) for the 8th Departmental Commission. The commission, headed by former Supreme Court Judge Ranjana Prakash Desai, will recommend changes to the remuneration, pensions, and allowances of central employees. The commission was formed in November 2025 and has eighteen months to submit its recommendations, meaning proposals may appear by May 2027, although the implementation process will take additional time.

The scope of the commission covers approximately 47 million central employees and 68 million pensioners. The exact size of the salary and pension increase is not yet known and will only become clear after the commission's recommendations are approved by the government.

There are five key economic factors that could influence the size of the salary and pension increase. Firstly, this is the state of the country's economy and the financial condition of the state. The decision on salary hikes will depend on the overall economic health, as well as the difference between government revenues and expenditures. The commission will examine aspects such as economic growth rates, inflation, and the Fiscal Deficit.

If economic activity remains high and pressure on the state budget decreases, there is potential for a more substantial salary increase. Conversely, if government spending rises and deficit control is a priority, the financial situation will play a decisive role in determining the size of the increase.

The government needs not only to increase spending on employee salaries and pensions but also to fulfill other important duties, including financing projects in road construction, railways, hospitals, education, and other areas of development, as well as implementing social welfare programs. Therefore, the departmental council faces a complex task—finding a balance between ensuring decent pay for workers and maintaining sufficient funds for government programs and development.

This is why the decision on salary increases is made not only based on staff demands or inflation levels but also considering the general financial needs of the state.

Pension expenditure is another critical factor for the 8th Departmental Commission. The state is responsible for paying pensions to employees hired before January 2004, as well as military personnel covered by the Old Pension Scheme (OPS). Salary and pension increases can raise overall state expenditure. Consequently, the commission must find a way to balance support for employees and pensioners with minimizing the burden on the state budget, taking into account current obligations and projected pension cost growth.

The recommendations of the central departmental commission are not limited to the federal level. States typically adopt or use central recommendations when changing the salaries and pensions of their employees. Thus, the 8th Departmental Council must assess the impact that changes in salaries and pensions will have on the budgets of various states. Since the economic situation and spending capacity vary across different states, understanding the financial impact of the recommendations is paramount.

A comparison of civil servant salaries with the pay levels in private companies and Public Sector Undertakings (PSUs) is also being conducted. The goal of this analysis is to determine whether government workers receive adequate compensation commensurate with their duties and workload. While this does not guarantee that the commission will recommend equating government and private sector salaries, analyzing this disparity is part of the evaluation process. The commission must make decisions considering the nature of the work, employee responsibilities, and the financial condition of the state.

An example is the 7th Departmental Commission, whose recommendations came into effect in January 2016. Under this council, a fitment factor of 2.57 was established, based on which the new salary was determined. Subsequently, periodic Dearness Allowance (DA) increases occurred. Currently, DA has reached 58% of the basic salary. Furthermore, the departmental council considers not only the basic salary but also other benefits such as House Rent Allowance (HRA), transport allowances, medical care, Travel Concession (LTC), and gratuity, meaning that the recommendations of the 8th Council could affect the total amount of payments and pensions for employees.

The commission has been given eighteen months to prepare its report, after which the government will begin reviewing these recommendations.

The decisions of the 8th Departmental Commission Council will determine the size of salary and pension increases for civil servants. The commission reviews numerous requirements concerning changes in the salary structure, increases in the basic rate, and the fitment factor. In this regard, representatives of the National Council-Joint Consultative Machinery (NC-JCM) union have demanded that the minimum basic rate be set at 69,000 rupees.

This demand is based on the use of a fitment factor of 3.833. However, it should be emphasized that this is currently only a proposal from the workers, not a sum approved by the government. Employees awaiting recommendations from the 8th Departmental Commission Council need to understand the difference between the basic rate, grade plan, pay level, and fitment factor, as they directly influence salary calculation and potential changes.

Labor organizations insist on raising the minimum basic rate to 69,000 rupees within the 8th Departmental Commission Council, proposing the use of a fitment factor of 3.833. The fitment factor is a multiplier applied when calculating the adjustment to the existing basic rate. Previously, the sixth Departmental Commission Council approved a factor of 1.86, and the seventh approved 2.57.

This time, the unions are demanding a higher multiplier to improve the financial situation of employees and pensioners amid rising inflation. Nevertheless, it must be understood that the 3.833 factor and the minimum basic rate of 69,000 rupees are currently only demands, not a final government decision. The final salary calculation will depend on the commission's recommendations, government approval, and prevailing rules.

The basic rate, or primary salary, constitutes the central part of a civil servant's income. It does not include allowances such as Dearness Allowance (DA) and House Rent Allowance (HRA). These allowances are usually calculated based on the basic rate. For example, the amount of the Dearness Allowance is determined based on the employee's basic rate. The House Rent Allowance is set according to current rules and the category of the corresponding city. Consequently, a change in the basic rate can affect the employee's total salary. The basic rate varies depending on the pay level and the employee's salary structure.

The grade plan system was introduced during the sixth Departmental Commission Council. It was used to reflect the employee's position and seniority within a defined pay group. Thus, it helped understand the employee's standing within the salary structure. However, the seventh Departmental Commission Council abolished the old grade plan system, implementing a pay matrix. This simplified the representation of pay levels and annual salary increases in an organized system. Therefore, when studying the current pay system, it is important to pay attention to the pay level and the pay matrix, not just the grade plan.

The seventh Departmental Commission Council introduced a pay matrix consisting of 18 levels. The pay level indicates the employee's status in terms of their salary plan. Each level has various basic rate steps, which allow understanding salary increases and progression to the next level. According to the seventh Departmental Commission Council's system, the starting basic rate for Level 1 is 18,000 rupees, while for Level 7 it is 44,900 rupees. Simply put, the pay level shows where the employee is on the pay matrix, and the basic rate is their current primary salary amount at that level. The 8th Departmental Commission Council may present recommendations for changes to this structure.

Employees' interest in the fitment factor stems from its use in calculating the adjusted basic rate. If the commission and the government approve any fitment factor, it will play a key role in determining the new basic rate based on the existing one. However, it is impossible to give an accurate assessment of the total salary based solely on the fitment factor. The total salary will also depend on the new pay matrix, allowances, prevailing rules, and other decisions. Similarly, an assessment of pension changes will only be possible after final government recommendations and decisions. Therefore, any salary forecasts based on the 3.833 factor or the 69,000 rupee basic rate should currently be considered only as a hypothesis or a demand.

The meeting of the 8th Departmental Commission Council is scheduled for October 23, 2026, in Mumbai. This is the second important meeting of the commission in October. Prior to this, a meeting was held on October 8 in Bangalore. During discussions in various states and dependent territories, union employees and other interested parties raised issues related to the basic rate, pay level, fitment factor, pension reforms, and allowances. The formation of the 8th Departmental Commission Council took place on November 3, 2025.