8th Pay Commission: Real pay hike history from 2nd to 7th CPCs; what's expected from the 8th CPC

In any conversation about the 8th Central Pay Commission (CPC), the key topic of interest these days is generally the expected fitment factor and the percentage by which total salaries may increase. While these are important for understanding the overall extent of the pay hike, there is little discussion on the real increase in pay.

Real increase in pay refers to the rise in salary after adjusting for inflation. For example, a 14.2% real increase in pay under the 7th CPC means that, after accounting for inflation, the effective increase in salary compared to the 6th CPC was 14.2%

The real pay of central government employees and pensioners is protected by the payment of dearness allowance and dearness relief respectively. DA/DR help mitigate the decline in value of salaries due to inflation.

Data shows that the real pay increase declined from 54% in the 6th CPC to 14.3% in the 7th CPC. Before the 6th CPC, the real increase in pay had gradually risen from 14.2% in the 2nd CPC to 31% in the 5th CPC.

Real pay hike history

What's the expected real pay hike under 8th CPC?

The 8th CPC is expected to submit its recommendations in the next 12-18 months. While it is too early to guess or estimate the real pay hike, experts at Kotak Institutional Equities had earlier estimated that the real pay hike could be only 13% under the 8th CPC, while the nominal pay hike will be around 83% and the fitment factor may be 1.8.

"While it is premature and speculative to ascertain the impact of the 8th CPC on the fiscal, past CPC reports have pegged the impact at 0.6-0.8% of GDP. 8th CPC will likely keep the fiscal cost capped at similar levels, translating to around ₹2.4-3.2 tn of additional expenditure. We estimate that at the minimum pay level (₹18,000 as per 7th CPC), the fitment factor could be around 1.8 (moving up to ₹30,000 in 8th CPC). This implies a pay growth (in real terms) of around 13% (14.3% in 7CPC)," the experts had said in a report in July 2025.