8th Pay Commission: There is good news for the employees of Indian Railways. With the implementation of the 8th Pay Commission, there is sure to be a big increase in the salaries of the employees. Keeping this in mind, Indian Railways has already started preparations. It has already started preparing for the increase in expenditure on the salaries of the employees in the coming time . After the implementation of the recommendations of the 8th Pay Commission , a big increase in the expenditure of the Railways is expected . Keeping this in mind , Railways has started taking many cost-cutting and saving steps to strengthen its finances .
The report will come in 18 months
The Eighth Pay Commission was constituted in January 2025 and has been given 18 months to submit its report. This means the Railways have limited time to improve its financial position before January 2026. The Railways learned a significant lesson from the previous Seventh Pay Commission experience.
When the Seventh Pay Commission was implemented in 2016 , employees’ salaries increased by 14 to 26 percent, increasing the annual burden on salaries and pensions by approximately Rs 22,000 crore. Now, according to internal estimates, this additional burden could reach Rs 30,000 crore after the Eighth Pay Commission.However, railway officials appear confident about the challenge. They say a comprehensive plan is already underway to manage the rising costs, focusing on internal resources, operational efficiency, and increasing freight revenue.
The Railways’ operating ratio was 98.90 percent in the fiscal year 2024-25, with a net income of Rs 1,341.31 crore. For the fiscal year 2025-26, the target is to slightly improve the operating ratio to 98.43 percent. Net revenue is projected to increase to Rs 3,041.31 crore.
The Railways is also expected to receive significant relief from power savings. Electrification of the entire rail network is expected to result in savings of approximately Rs 5,000 crore annually. Furthermore, payments to the Railway Finance Corporation ( IRFC) will also decrease from fiscal year 2027-28, as a significant portion of capital expenditures in recent years have been funded through budgetary support.
The demands of employee unions could also pose a challenge for the Railways. The Seventh Pay Commission implemented a 2.57 fitment factor, while the unions are now demanding a 2.86 fitment factor. If this demand is met, salary expenditure could increase by more than 22 percent.
Despite this, the Railways is confident that it will be able to manage its financial situation . In line with this vision , the budget for employee salaries has been increased to Rs 1.28 lakh crore for the 2025-26 fiscal year , up from Rs 1.17 lakh crore last year . The allocation for pensions has also been increased. The Railways believes that through proper planning and increased income , the impact of the Pay Commission can be balanced .