8th Pay Commission: How an NNP growth-based proposal points to a 300% hike in minimum salary

This article revisits the proposal, explaining the three-step calculation behind it.

Step 1: Linking pay to national income

The BPMS proposal invoked the methodology of the 5th Central Pay Commission, which adopted what it called a "modified version of the Constant Relative Income Criterion."

The federation argued that "the revision of pay scales should be guided by objective economic indicators and prevailing socio-economic conditions," and picked the growth in Per Capita Net National Product (NNP) as its benchmark.

Citing data from the Ministry of Statistics and Programme Implementation, the proposal stated that "the Per Capita Net National Income at current prices has increased from ₹1,03,219 in 2016-17 to ₹1,92,774 in 2024-25. This reflects an increase of approximately 86.76% over the period." It summarised the calculation as below:

• Absolute Increase: ₹1,92,774 – ₹1,03,219 = ₹89,555

• Percentage increase: (₹89,555 ÷ ₹1,03,219) x 100 = 86.76% (approx.)

Applying the 86.76 per cent growth factor to the existing minimum pay determined by the 7th CPC, the document calculates a revised minimum pay of ₹53,114.54 as below

Minimum pay of ₹18,000 + dearness allowance at 58 per cent amounting to ₹10,440 = ₹28,440. An increase of 86.76% on this sub-total adds ₹24,674.54, bringing the revised minimum pay to ₹53,114.54.

• Minimum Pay (7th CPC): ₹18,000

• Dearness Allowance @ 58%: ₹10,440

• Sub-total: ₹ 28,440

• Increase @ 86.76%: ₹24,674.54

• Revised minimum pay: ₹53,114.54

Step two: Expanding the family unit

The 7th CPC based its minimum pay calculation on a three-unit family structure. BPMS' proposal argued this "does not adequately reflect the prevailing Indian socio-cultural framework," noting that "a government employee is generally responsible not only for the spouse and children but also for dependent parents".

The federation proposed a five-unit family: Government servant as one unit, spouse as one unit, two minor children as 1.5 units (0.75 each), and parents as 1.5 units (0.75 each). Using this structure, it calculated the revised minimum pay as

(₹53,114.54/3)x 5 = ₹88,524.24

Step three: Fiscal moderation

Instead of seeking the full computed amount, the proposal advocates a moderated figure. "Instead of adopting the full computed figure of ₹88,524.24, a calibrated level of ₹72,000 per month may be considered appropriate. This figure represents a balanced midpoint between the existing pay structure and the fully justified requirement," BPMS said.

The federation said the ₹72,000 minimum pay would ensure:

• Partial but meaningful neutralisation of inflationary pressures

• Improvement in living standards without imposing excessive fiscal strain

• Alignment with long-term fiscal consolidation goals of the Government

Fitment factor and pay matrix

The proposed minimum pay of ₹72,000, set against the 7th CPC base of ₹18,000, yields a fitment factor of 4.00. BPMS described this as "not only a simple multiplier but as a reflection of cumulative economic growth, inflationary trends, and evolving household responsibilities."

It also noted that the fitment factor "includes a component of 1.58 on account of Dearness Allowance (DA) neutralisation," with the remainder representing the real increase necessary to ensure a dignified standard of living.