7th Pay Commission Nears Its End: Salaries Rose 55% in a Decade, But the Base Pay Story Tells a Different Tale

As the 7th Central Pay Commission (CPC) completes almost ten years of implementation on December 31, a significant chapter in the salary framework of central government employees is coming to a close. Over the past decade, salaries have increased by around 55 percent. However, this growth has largely been driven by rising Dearness Allowance (DA), while the minimum basic pay has remained unchanged since 2016. This contrast is the key reason why expectations from the upcoming 8th Pay Commission are steadily growing.

The 7th Pay Commission came into effect on January 1, 2016, bringing major structural changes to salaries, allowances, and the overall method of pay calculation. These reforms continue to shape employee expectations today, especially at a time when discussions around the next pay commission are gaining momentum.

Fitment Factor and Pay Matrix: The Biggest Reforms

One of the most important decisions under the 7th Pay Commission was fixing the fitment factor at 2.57. This factor determined how much salaries would increase while transitioning from the 6th Pay Commission to the new system.

Another landmark reform was the complete removal of the grade pay system. In its place, the government introduced a simplified and transparent pay matrix. This change made it easier for employees to understand their salary progression and future increments, reducing confusion around pay calculations.

Salary Structure at the End of the 6th Pay Commission

When the 6th Central Pay Commission ended on December 31, 2015, inflation had already risen sharply. This was clearly reflected in the Dearness Allowance, which had climbed to 119 percent.

For employees at Level-1, the salary structure at that time looked like this:

• Basic Pay: ₹7,000

• Grade Pay: ₹1,800

• Total Basic (Basic + Grade Pay): ₹8,800

With DA at 119 percent, the DA amount alone was around ₹10,472. In addition, employees in X-category cities received House Rent Allowance (HRA) of ₹2,640. Excluding transport allowance and other minor benefits, the total monthly salary came to approximately ₹21,800 to ₹22,000.

In simple terms, the sharp rise in DA before the end of the 6th Pay Commission had already absorbed much of the inflationary pressure. This is one reason why the salary jump after the implementation of the 7th Pay Commission initially felt less significant to many employees.

What Changed Under the 7th Pay Commission

In 2016, the 7th Pay Commission reset DA to zero but compensated for this by sharply increasing the basic pay. For Level-1 employees, the changes were substantial:

• Basic Pay increased to ₹18,000

• Grade Pay was completely abolished

• A new pay matrix replaced the old system

Nearly ten years later, DA under the 7th Pay Commission has risen to about 58 percent. On a basic pay of ₹18,000, this translates to a DA amount of roughly ₹10,440. HRA for employees in X-category cities now stands at ₹5,400.

As a result, excluding transport allowance and other service-specific benefits, the current monthly salary of a Level-1 employee has reached around ₹33,500 to ₹34,000.

Then vs Now: A Clear Comparison

Looking at the numbers over the last decade, the changes are evident:

• Basic pay increased from ₹8,800 (basic plus grade pay) to ₹18,000, more than doubling

• DA percentage is much lower than earlier, but the actual DA amount remains almost the same at around ₹10,400

• HRA has more than doubled, significantly boosting take-home pay

• Overall monthly salary has risen from about ₹22,000 to nearly ₹34,000

In total, this represents an approximate 55 percent increase in salary over ten years.

Why the 8th Pay Commission Is in Focus

Despite this visible rise in overall salary, one critical issue remains unresolved. The minimum basic pay of ₹18,000 has not changed since 2016. All subsequent increases in salary have come solely through higher DA, not through an increase in the base pay itself.

Now that DA has once again crossed the 50 percent mark, employee unions argue that relying only on DA adjustments is no longer sufficient. They are demanding a revision of the minimum basic pay and a higher fitment factor in the next pay commission.

Rising Expectations from the Next Pay Commission

As the tenure of the 7th Pay Commission formally comes to an end, the numbers clearly explain why expectations from the 8th Pay Commission are so high. While total salaries have increased over the last decade, this growth has been largely inflation-linked through DA. The core component of salary—the basic pay—has remained frozen for nearly ten years.

In an era of steadily rising living costs, the lack of an increase in base pay has become the biggest concern for employees. This is why staff associations are no longer satisfied with periodic DA hikes alone. They are looking to the next pay commission for a meaningful revision in basic pay and a stronger fitment factor that can deliver a more substantial and lasting salary increase.