8th Pay Commission: The wait for central government employees to receive salary increases under the 8th Pay Commission has now become even longer. Despite January 2026 having passed, no salary revision announcement has been made, making it clear that the implementation of the 8th Pay Commission is unlikely to be completed on schedule. According to a report by rating agency ICRA, this delay could have a profound impact not only on employees but also on the government’s financial health in the coming years.
Why is the 8th Pay Commission being postponed?
Typically, a new pay commission is implemented every 10 years. The 7th Pay Commission became effective on January 1, 2016, so it was expected that the 8th Pay Commission would be implemented from January 2026. However, according to ICRA, the commission’s report could take 15 to 18 months to be released. Consequently, the likelihood of a salary revision in the near future appears extremely low.
Arrears will increase pressure on the government
ICRA says that whenever the 8th Pay Commission is implemented, the government may implement it retrospectively, starting January 1, 2026. This would mean paying employees arrears for 15 months or more at once. This could lead to a dramatic increase in government expenditure in a single year. It is estimated that salary expenditure could jump by 40 to 50 percent in FY2028.
The experiences of previous pay commissions also raise concerns for the government. During the 7th Pay Commission, only six months’ arrears were paid, yet salary expenditure increased by more than 20 percent in one year. Delays in the 6th Pay Commission resulted in the payment of more than two and a half years’ worth of arrears, which continued to strain the budget for several years. For this reason, the 8th Pay Commission is now being viewed as a major financial risk.
Budget 2026 and Capital Expenditure Strategy
ICRA estimates that the government may increase capital expenditure in FY2027 to offset the impact of this large expenditure. According to the report, capex could increase by approximately 14 percent to reach Rs 13.1 lakh crore. This will accelerate infrastructure and development plans and provide some fiscal space for the subsequent salary and pension burden.
