8th CPC: Defence Personnel Push For Higher Pay, New Inflation Formula To Calculate DA, DR

Anticipated projections indicate that they could see a significant increase in their salaries and pensions under the proposed 8th Central Pay Commission (CPC), which is expected to submit its report in the latter half of 2027. Once accepted by the government, it is likely to come into effect from January 1, 2026.

While a final decision on the pay matrix and fitment factor is awaited, early estimates suggest that the revised pay structure could result in a 30 per cent to 50 per cent increase in basic pay, offering long-awaited financial relief to members of the Army, Navy, and Air Force.

The proposed revision is expected to benefit personnel across all ranks: from Sepoys and Junior Commissioned Officers (JCOs) to senior officers and Generals. Since pension calculations are linked to basic pay, retired defence personnel are also expected to receive revised pensions once the new pay matrix is implemented.

Salary Hike Hinges On Fitment Factor

The biggest determinant of the salary revision will be the fitment factor, a multiplier used to calculate revised basic pay. The 8th CPC is still considering the demands made by the All India Defence Employees’ Federation (AIDEF) to have a fitment factor of 2.86.

If approved, the revised salary would be calculated by multiplying the existing basic pay with the fitment factor.

For instance, a Havildar currently drawing a basic pay of ₹29,200 would see the revised basic pay rise to approximately ₹83,512 (₹29,200 × 2.86). The same formula will apply across all defence ranks, though the final figures will depend on the pay matrix recommended by the Commission and accepted by the government.

The proposed pay revision is expected to provide a substantial boost to retired defence personnel. Since defence pensions are linked to basic pay, any increase in pay scales would automatically result in higher pensions.

One Rank One Pension (OROP) Framework

Pension revisions are also expected to continue under the One Rank One Pension (OROP) framework. Veterans, who retired before the implementation of the 7th Pay Commission, are expected to benefit the most, as many of them continue to receive pensions based on older pay structures.

In addition, the Dearness Allowance (DA) component is likely to be recalibrated under the new pay regime, with ongoing discussions suggesting that the existing DA may be merged with basic pay before the new salary structure is implemented.

AIDEF Pushes For Major Reforms

Apart from salary revisions, the AIDEF has submitted a detailed supplementary memorandum to the 8th Pay Commission, seeking broader reforms for defence civilian employees.

Among its major demands are restructuring lower pay scales, improving promotion avenues, reducing the residency period required for promotions, and granting organised cadre status to several departments.

In its memorandum to the 8th CPC, it has also proposed upgrading technician posts to higher pay levels, introducing structured career progression for Multi-Tasking Staff (MTS), bringing fire service employees on par with the Delhi Fire Service, and upgrading Accounts Officers to Pay Level 9.

For employees of the Defence Research and Development Organisation (DRDO), the AIDEF has recommended restructuring the technical cadre, ensuring faster promotions, introducing a variable increment system, and providing pay parity with comparable Central government posts.

Demand For New Inflation Index

In one of the most significant suggestions to the 8th CPC, the AIDEF, while expressing concerns over the method used to calculate DA and Dearness Relief (DR), has demanded revision of the All India Consumer Price Index for Industrial Workers (AICPI-IW) basket introduced in 2022-23. The federation has argued that the current inflation index no longer reflects the actual spending pattern of Central government employees and pensioners.

According to AIDEF, the revised AICPI-IW reduced the weight assigned to food and beverages from 45.86 per cent to 36.75 per cent, while increasing the weightage for relatively stable expenditure categories such as housing, healthcare, transport, communication, and digital services.

The AIDEF, in its representation to the 8th CPC, argued that lower-paid employees and pensioners spend a much larger share of their income on food, medicines, education, healthcare, and other essential household expenses. As a result, they experience inflation differently from what the existing index captures.

To address this issue, the AIDEF has urged the 8th CPC to consider creating a separate Cost of Living Index specifically for Central government employees and pensioners.

The proposed index would assign greater weight to essential expenditure categories such as food, healthcare, housing, education, transportation, and daily household consumption. According to the federation, such an index would provide a more realistic basis for determining DA, DR, future pay revisions, and pension protection.

The federation has also suggested that future fitment factors should reflect changing household expenditure patterns rather than relying solely on the existing inflation index.

Focus On Pensioners’ Rising Expenses

The AIDEF has argued that pensioners deserve special consideration because a substantial portion of their income is spent on medicines, medical treatment, health insurance and caregiving services.

According to the federation, if these essential expenses continue to rise faster than the official inflation rate, pensioners may witness a gradual decline in their real purchasing power despite receiving periodic DR increases.

The organisation has recommended that elderly healthcare expenditure should receive greater recognition while framing the new compensation and pension structure under the 8th CPC.