8th Pay Commission: The 8th Pay Commission has been established, and its terms of reference have received approval. Government employees and pensioners are now looking forward to its implementation. Once the report is submitted, a group of ministers will carry out a thorough review of the 8th Pay Commission report. Following this, the report will be presented to the central government, paving the way for its implementation.
Experts indicate that the process of the 8th Pay Commission might take two to three years to finalize. Recently, reports have surfaced suggesting that implementing the 8th Pay Commission could exert considerable pressure on both central and state governments. Neelkanth Mishra, an economist and member of the Prime Minister’s Economic Advisory Council (EAC-PM), has stated that the implementation of the 8th Pay Commission will significantly impact public finances.
Mishra predicts that the total salary and pension disbursements under the 8th Pay Commission could surpass Rs 4 lakh crore. If the arrears for five quarters are factored in, the total might approach around Rs 9 lakh crore. He emphasized that policymakers must carefully evaluate this financial burden as they prepare for FY28. During his address at the CII IndiaEdge 2025 Summit in New Delhi, he noted that the implementation of the Pay Commission recommendations will lead to a notable increase in fiscal pressure. This process must be approached with caution, ensuring compliance with debt-to-GDP commitments.
This cautionary note comes as India gears up to implement a five-year shift in its debt-to-GDP treasury fund starting from FY27, with details anticipated in the forthcoming Union Budget. Mishra elaborated that India is already following a distinct trajectory in its treasury consolidation efforts, and the current low inflation scenario suggests there is spare capacity within the economy. This, along with the substantial costs associated with the Eighth Pay Commission, may restrict the government’s ability to tighten treasury policies.
Update on the 8th Pay Commission
The Ministry of Finance has provided clarification in response to concerns from trade unions and employee groups about the Terms of Reference (TOR) for the 8th Pay Commission. Since the TOR was announced, unions have highlighted a notable gap: the lack of a specific mention regarding pension revision. All prior Pay Commissions had made it clear that both pension and salary revisions were included.
This lack of information has sparked worries that the government may intend to exclude pension reforms from the 8th Pay Commission’s agenda. With more than 6.9 million pensioners relying on these revisions to ensure their benefits align with those of active employees, the matter has quickly escalated into a significant issue. Numerous organizations have reached out to the government, cautioning that omitting pension revisions would be a serious mistake and could negatively affect retired employees.