Government Moves Closer to Establishing Eighth Pay Commission; Cabinet Approval Expected Soon
The government is nearing the establishment of the Eighth Pay Commission, with its terms of reference set to be sent for cabinet approval by early next month. Once approved, a formal notification will be issued, allowing the commission to begin its operations from April, according to a senior government official.
Process and Timeline
The Finance Ministry has sought input from the Ministries of Defence and Home Affairs, as well as the Department of Personnel and Training (DoPT) regarding the commission’s mandate. Some feedback has already been received, while others are still pending. “We have gathered inputs, and the final recommendations will be sent to the cabinet this month or early next month. Once approved, a notification will be issued,” the official told Private Sources.
The commission is expected to start functioning once the terms of reference are finalized. If formed by the end of the month, it is likely to submit its report by March 2026, though the process could take less than a year. Previous pay commissions have usually taken over a year to present their findings.
Expected Impact
The Eighth Pay Commission’s recommendations will affect over 50 lakh central government employees and pensioners, including defence personnel. This will have a significant financial impact on government expenditure. For reference, the implementation of the Seventh Pay Commission in 2016 increased government spending by approximately ₹1 lakh crore in FY17.
However, the financial burden of the new pay revisions will only be felt from FY27 onwards. In addition to impacting government finances, the pay hikes are expected to boost consumption, drive economic growth, and improve the standard of living for government employees.
Historical Context and Current Updates
Since 1947, India has constituted seven pay commissions, with the last one being implemented in 2016. These commissions have played a vital role in determining salary structures, allowances, and pension benefits, significantly influencing public expenditure.
Meanwhile, the government has ruled out merging 50% Dearness Allowance (DA) and Dearness Relief (DR) with basic pay and pensions for now. Minister of State for Finance Pankaj Chaudhary clarified this in response to a Rajya Sabha query on March 20.
