7th Pay Commission: Minimum Salary of Government Employees to be Hiked After Budget 2023

After the Union Budget 2023, the fitment factor of government employees' salary is expected to be changed upward, enhancing their pay, according to media reports. The minimum wage would increase from Rs 18,000 to Rs 26,000 due to the increase in the fitment factor, a standard number that is multiplied by the base pay to determine the employee’s total remuneration.

The current value of the common fitment factor is 2.57%. In other words, if a person receives a basic salary of Rs 15,500 in the 4200 Grade Compensation, his total pay will be Rs 15,500 x 2.57, or Rs 39,835. The fitment ratio of 1.86 has been suggested by the 6th CPC.

Employees are now reportedly requesting that the government increase the fitting factor to 3.68. The increase will bring the minimum salary up to Rs 26,000 from its present level of Rs 18,000.

On February 1, Finance Minister Nirmala Sitharaman will deliver the Budget Speech and the Budget 2023. Beginning on January 31, Parliament will hold its budget session. According to earlier media reports, central government personnel covered by the 7th Pay Commission would likely see a rise in their dearness allowance (DA) starting on January 1 in March 2023. 

Additionally, the government would increase retirees' dearness relief (DR). In addition, the employees are reportedly also expected to receive their 18-month DA arrears. Every January 1 and July 1, dearness allowance (DA) and dearness relief (DR) are updated. The most recent increase in September increased the DA by 4% to 38%, benefiting roughly 48 lakh central government employees and 68 lakh retirees. Prior to this, the government increased the DA in March by 3% to 34% under the 7^th pay commission.

How is the DA Hike Calculated on the basis of the 7^th Pay Commission?

The country's inflation rates play a role in the government's decision to increase DA. High inflation increases the likelihood that the DA will be raised further. Retail inflation in India has exceeded the RBI's tolerance level of 2–6% for the past 10 months under the prevailing circumstances. This might persuade the government to approve additional pay increases.

The percentage rise in the 12-month average of the All India Consumer Price Index (AICPI) for the period ending June 2022 is used to determine the DA and DR hike. Despite the fact that the federal government adjusts the allowances twice a year on January 1 and July 1, the decision is often made public in March and September.