8th CPC: 7% increment rate vs high fitment factor

The 8th Pay Commission is proposing an annual increment rate of 7%, compared to the lower rate of 3% under the previous 7th Pay Commission. This higher rate would enable central government employees to double their basic pay within 10 years. While some employee organizations, such as the All India New Pension Scheme Employees’ Federation (AINPSEF), advocate for a 7% increment, others like the National Council of the Joint Consultative Machinery (NC-JCM), the All India Defence Employees Federation (AIDEF) and the Federation of National Postal Organisations (FNPO) recommend a 6% increment.

According to Ramachandran Krishnamoorthy, associate partner at BDO India, a one-time revision, or fitment factor, can provide a significant jump in salary immediately, but the cumulative earnings from a higher annual increment still take many years to catch up. When comparing a one-time 2.57x fitment revision with normal 3% annual increments to staying on the old scale with a permanently higher 5% or 7% annual increment rate, Krishnamoorthy's projections show that the higher increment rates don't overtake the salaries supplemented with a high fitment factor and the 3% annual increment for decades.