8th Pay Commission: Why 2.57 became the fitment factor in 7th CPC, not 2.6 or 2.9?

The fitment factor to be decided by the upcoming 8th Central Pay Commission (CPC) is being keenly awaited by the Central Government employees. The fitment factor will tell them how much their salaries have increased.

In the run-up to the formation of the 8th CPC, there have been several speculations about the expected fitment factor. As there is a long way before the finalisation of the 8th CPC report, it will be interesting for employees to know know the 7th CPC decided the fitment factor.

But have you ever wondered why the fitment factor was precisely 2.57 and not 2.6, 2.9, or any other number? If yes, this article will help you understand.

How 7th CPC found the 2.57 fitment factor

The answer to the above query lies in the way the 7th CPC calculated the minimum salary to be recommended for employees. It determined the 2.57 fitment factor through a very complex calculation (see the table below). We have tried to simplify the process as much as possible in the following paragraphs:

Based on the norms set by the 15th Indian Labor Conference (ILC) in 1957, the 7th CPC first determined the minimum amount that will be required for buying items of basic needs such as rice/wheat, dal, raw vegetables, green vegetables, fruits, milk, sugar, fish meat etc, for a family of three. The amount came out to be ₹9217.99. To this, the 7th CPC added the following costs:

• ₹2304.5 for fuel electricity, water charges
• ₹2033.38 for marriage, recreation, festivals etc.
• ₹3388.97 to provide for skills
• ₹524.07 for housing

The sum of all the above amounts was around ₹17468.91. To this, a 3% step-up of ₹524.07 was added to account for the dearness allowance, which was projected to rise to 125% on January 1, 2016.

The final sum of all the above amounts was ₹17,992.98, rounded off to ₹18,000. This amount was recommended by the 7th CPC as the minimum pay to be effective from January 1, 20216. The minimum pay of ₹18,000 was 2.57 times the minimum pay of ₹7,000 fixed by the government while implementing the 6th CPC’s recommendations from January 1, 2006.

Source: 7th CPC report

The 7th CPC used this 2.57 factor as the fitment factor, saying, "basic pay at any level on 01.01.2016 (pay in the pay band + grade pay) would need to be multiplied by 2.57 to fix the pay of an employee in the new pay structure."

Of 2.57 fitment, 2.25 provided for merging of basic pay with DA, assumed at 125% on January 1, 2016, while the balance was the real increase in pay recommended by the 7th Pay Commission.