8th Pay Commission chatter grows: Brokerages see sharpest central govt pay rise yet
Ambit Capital’s July 9 report projects a fitment factor range between 1.83 and 2.46. In its base case of 1.82, salaries could rise by 14%. A median case factor of 2.15 points to a 34% increase, while its upper case 2.46 scenario implies a 54% jump.
- Aug 11, 2025,
- Updated Aug 11, 2025 8:02 AM IST
Speculation is mounting over the 8th Pay Commission’s potential impact on central government salaries, with brokerage forecasts suggesting hikes could range from 13% to as much as 54% — even though the commission is yet to be formally constituted.
Two recent research notes — from Ambit Capital and Kotak Institutional Equities — have outlined possible fitment factors, the multiplier used to revise basic pay, and the resulting pay jumps.
Ambit Capital’s July 9 report projects a fitment factor range between 1.83 and 2.46. In its base case of 1.82, salaries could rise by 14%. A median case factor of 2.15 points to a 34% increase, while its upper case 2.46 scenario implies a 54% jump.
Kotak Institutional Equities’ July 21 note offers a more conservative view, pegging the fitment factor at 1.8, which would translate to a 13% rise.
The fitment factor is applied to the current basic pay, but actual growth is smaller because the dearness allowance (DA) resets to zero when a new pay commission takes effect. For example, the 7th Pay Commission in 2016 recommended a factor of 2.57, raising the minimum basic salary from ₹7,000 to ₹18,000 — but the effective hike was 14.3% once DA reset was considered.
This time, the DA stands at 55% of basic pay, far below the 125% level before the 7th Pay Commission rollout, potentially leading to a sharper effective hike even with lower fitment factors.
Based on the latest projections, a central government employee earning ₹97,160 (including allowances) could see the following increases:
- 1.82 factor: 14% rise to ₹115,297
- 2.15 factor: 34% rise to ₹136,203
- 2.46 factor: 54% rise to ₹151,166
Ambit notes that the government could realistically consider factors between 1.83 and 2.46. However, the exact figure will only emerge after the 8th Pay Commission is formed and completes stakeholder consultations — a process expected to take several months once the Terms of Reference are finalised.
Speculation is mounting over the 8th Pay Commission’s potential impact on central government salaries, with brokerage forecasts suggesting hikes could range from 13% to as much as 54% — even though the commission is yet to be formally constituted.
Two recent research notes — from Ambit Capital and Kotak Institutional Equities — have outlined possible fitment factors, the multiplier used to revise basic pay, and the resulting pay jumps.
Ambit Capital’s July 9 report projects a fitment factor range between 1.83 and 2.46. In its base case of 1.82, salaries could rise by 14%. A median case factor of 2.15 points to a 34% increase, while its upper case 2.46 scenario implies a 54% jump.
Kotak Institutional Equities’ July 21 note offers a more conservative view, pegging the fitment factor at 1.8, which would translate to a 13% rise.
The fitment factor is applied to the current basic pay, but actual growth is smaller because the dearness allowance (DA) resets to zero when a new pay commission takes effect. For example, the 7th Pay Commission in 2016 recommended a factor of 2.57, raising the minimum basic salary from ₹7,000 to ₹18,000 — but the effective hike was 14.3% once DA reset was considered.
This time, the DA stands at 55% of basic pay, far below the 125% level before the 7th Pay Commission rollout, potentially leading to a sharper effective hike even with lower fitment factors.
Based on the latest projections, a central government employee earning ₹97,160 (including allowances) could see the following increases:
- 1.82 factor: 14% rise to ₹115,297
- 2.15 factor: 34% rise to ₹136,203
- 2.46 factor: 54% rise to ₹151,166
Ambit notes that the government could realistically consider factors between 1.83 and 2.46. However, the exact figure will only emerge after the 8th Pay Commission is formed and completes stakeholder consultations — a process expected to take several months once the Terms of Reference are finalised.