The Railway Senior Citizens Welfare Society (RSCWS) has recently appealed to Finance Minister Nirmala Sitaraman, urging the establishment of the 8th Pay Commission to be effective from 1st January 2024. This appeal is based on anticipating a substantial increase in the rates of Dearness Allowance (DA) and Dearness Relief (DR) exceeding 50% in the upcoming year.
On 30th May 2023, the RSCWS submitted a memorandum to the Ministry of Finance, outlining the imperative need for a new pay commission for central government employees and pensioners. The memorandum emphasized the financial difficulties central government employees and pensioners have faced for the past 70 years due to prolonged intervals of 10 years between successive Central Pay Commissions.
Based on the memorandum, the 7th Central Pay Commission (CPC) report was presented in February 2017. Subsequently, in July and August 2017, orders were issued for its implementation, stating that arrears of the Revised Pays would be disbursed from 01-01-2016, while allowances and other related components would be granted at a later date(s).
The RSCWS further emphasized that the 7th Pay Commission had set the Minimum Pay at Rs 18,000 instead of Rs 26,000 and had made an “incorrect” proposal of a fitment factor of 2.57 instead of 3.15.
According to the memorandum, “Based on the recommendations of the past three Central Pay Commissions, the future pay revision should occur when the DA/DR reaches 50% or more than the basic pay. The pay structure needs to be revised to offset the impact of inflation. The rate of DA/DR is projected to surpass 50% or even exceed it from Jan-2024; therefore, the Pay & Allowances and Pension should be revised from January 2024.”
The memorandum emphasized that the Pay Commissions historically take approximately two years to submit their reports, and the government then takes an additional year or more to review and implement them. This extended process further diminishes the relative worth of the proposed Pay and Pension determined by the Pay Commission.
Therefore, we kindly request the prompt establishment of the Eighth Central Pay Commission and the provision of interim relief starting from January 1, 2024, to compensate Central Government employees and pensioners. This relief addresses the erosion of their Pay and Pension caused by inflation and the loss of correlation with the country’s GDP, as stated by the RSCWS.
Additionally, the RSCWS highlighted that India’s per capita income, adjusted for current prices, has more than doubled from Rs. 93,293 in 2015-16 to Rs. 1,97,000 in 2022-23 (according to the Budget Speech of MOF for the year 2023-24). However, during the same period from January 1, 2016, to January 1, 2023, the Pay and Pension of Central Government employees have only increased by 42%, in contrast to the 111% rise in the per capita income of the country mentioned earlier.
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Wrapping Up
Last year, the Central Government indicated that establishing another pay commission might not be required. Pankaj Chaudhary, the Union Minister of State for Finance, stated that there is currently no proposal to form the 8th Pay Commission. You can refer to the source for more detailed information.
Central Government Employees receive a Dearness Allowance (DA) rate of 42% of their basic pay. It is anticipated that the DA will soon witness an additional increase of 3% based on the basic pay. Considering this trajectory, by the end of 2024, the DA/DR rate may reach approximately 50% or potentially even higher.
