Good news for government employees! According to a report by Ambit Capital on July 9, the 8th Pay Commission may be implemented in the financial year 2026–27 (FY27). This may increase the salary and pension of government employees and pensioners by 30–34%. The report says that around 1.12 crore central government employees and pensioners will benefit from this revision. This increase in income will give people more money to spend and is expected to boost market consumption.

Which Sectors Will Get Benefits?

Ambit Capital says that some sectors will get good benefits from the 8th Pay Commission. These sectors are passenger vehicles (cars and bikes), banks and finance, FMCG (daily use items), and QSR (fast food restaurants). But how much benefit they get will depend on three things — how much salary increases, which fitment factor is used, and when the pay commission starts. If the pay commission is delayed, then employees may get arrears (pending salary), which they may spend at once. This will also help the market.

Salary May Increase from 14% to 54%

The report says that salaries can go up by 14% for lower-level employees and 54% for higher-level employees. Because of this, the government will need ₹1.3 lakh crore extra. To manage this extra cost, the government may take steps like:

Reducing Capex (capital expenses)

Improving GST rules

Taking more dividends from PSU companies

Right now, tax income is going down, and government spending is already fixed, so extra money will be needed.

What Happened in the 7th Pay Commission?

The 7th Pay Commission started in January 2016 and will end in December 2025. During this time, the average salary increase was only 14%, which was the lowest since 1970. During both the 6th and 7th Pay Commissions, the government reduced capital spending to handle the extra money needed for salaries. Now, because of low tax income (especially income tax), the government may again depend on PSUs, GST reform, and dividends.

Changes in Pension Scheme

From financial year 2026 (FY26), the new Unified Pension Scheme will start. In this, the government’s share in the pension fund will increase from 14% to 18.5%. Out of this, 8.5% can be invested by the government in different ways. If the government invests 45% of this amount in the stock market, then stock market investment will grow from ₹24,500 crore to ₹46,500 crore. This will be 7.7% of the total money flowing in during FY25.