Summary of "8th Pay Commision Salary Calculation | कितनी होगी Salary 8th Pay लागू होने पर | SAGAR SINHA"
Summary of Video: "8th Pay Commission Salary Calculation | कितनी होगी Salary 8th Pay लागू होने पर | SAGAR SINHA"
This video provides a detailed explanation of the salary structure changes and calculations related to the upcoming 8th Pay Commission for government employees in India. The presenter debunks exaggerated media claims about salary increases (like 157%, 200%, 250%) and explains the realistic expectations based on verified data and expert analysis.
Main Financial Strategies and Concepts Explained:
- Salary Components in Government Pay:
- Basic Salary: The core salary amount on which increments are based.
- Dearness Allowance (DA): A cost-of-living adjustment allowance to offset inflation, revised every six months.
- House Rent Allowance (HRA): Compensation for accommodation expenses, varies by city size.
- Travel Allowance and Special Allowance: Additional allowances applicable in specific cases.
- Dearness Allowance (DA) Calculation and Impact:
- DA increases typically by 3% every six months but has varied historically from 2% to even 10%.
- DA accumulates over time but resets to zero when a new Pay Commission is implemented; the accumulated DA is then merged into the new basic salary.
- Historical DA trends show high values (up to 125% during the 6th Pay Commission) but currently around 55%.
- The DA rate significantly influences the overall salary increase and the Fitment Factor needed.
- Fitment Factor:
- A multiplier used to calculate the new basic salary from the old basic salary at the implementation of a new Pay Commission.
- Calculated as: New Basic Salary ÷ Old Basic Salary = Fitment Factor.
- Past fitment factors: 1.40 (5th Pay), 1.86 (6th Pay), 2.57 (7th Pay).
- For the 8th Pay Commission, a Fitment Factor around 2.8 is discussed, requiring a much higher percentage increase in salary (around 66-70%) due to lower DA compared to previous commissions.
- Media narratives often exaggerate percentage increases by comparing current salaries with old basic salaries without accounting for DA and increments over the years.
- Increment Percentage:
- Increment percentages (e.g., 14% last time) are added on the new basic salary after merging DA.
- To achieve a similar Fitment Factor now, a significantly higher Increment Percentage (around 66-70%) may be required.
- House Rent Allowance (HRA) Changes:
- HRA is linked to the basic salary and city classification (small, medium, metro).
- If DA is below 25%, HRA rates are 8%, 16%, and 24% for small, medium, and large cities respectively.
- If DA exceeds 50%, HRA rates increase to 10%, 20%, and 30%.
- The government may move towards a fixed HRA system independent of DA fluctuations.
- Realistic Salary Increase Expectations:
- Entry-level employees (e.g., peons) are unlikely to see salaries jump to ₹50,000-₹60,000 immediately.
- For a salary to reach such levels, a Fitment Factor of 3 (i.e., 200% increase) and corresponding increments of over 80% would be necessary, which is unlikely.
- The salary increase will be gradual, and delayed due to the late formation of the 8th Pay Commission.
- Critique of the Pay Commission System:
- The presenter criticizes the 10-year gap and complex calculations of the Pay Commission.
- Suggests annual salary increments like the private sector to avoid large, irregular jumps and confusion.
- Highlights how the government uses DA to manage inflation and employee satisfaction, especially when infrastructure development is slow.
- Implementation Timeline:
- The 8th Pay Commission’s recommendations and salary revisions are expected to start from 2026.
- Delay in commission formation may push actual salary disbursement to 2027 or 2028.
- Any arrears due to delays will be paid as lump sums later.
Step-by-Step Methodology for Salary Calculation (as explained):
- Step 1: Identify the old basic salary before the new Pay Commission.
- Step 2: Add accumulated DA to the old basic salary to get a new basic salary.
- Step 3: Apply the Increment Percentage decided by the government on the new basic salary.
- Step 4: Calculate the Fitment Factor by dividing the new basic salary by the old basic salary.
- Step 5: Use the Fitment Factor as a multiplier for individual salaries to estimate new salaries.
- Step 6: Add other allowances like HRA based on city classification and revised DA/HRA rules.
Category
Business and Finance
