8th Pay Commission: Government employees may soon receive some good news. The central government is expected to constitute the 8th Pay Commission next week . This move comes just before the Bihar Assembly elections and nearly ten months after the cabinet approval.
This commission will recommend new pay and pension rules for approximately 11.8 million central government employees and pensioners. According to media reports, the government has finalized the commission’s Terms of Reference (ToR), the scope of work, and the names of its chairman and members, who will oversee the pay and pension revision process, which occurs every ten years.
This move is being taken almost a year later than previous pay commissions. The commission is expected to take 6 to 12 months to prepare its report. Once implemented, its effects will be considered retrospective, effective January 1, 2026. Prime Minister Narendra Modi approved the formation of the 8th Pay Commission on January 16, 2025, just before the Delhi Assembly elections. The government has also sought input from all key stakeholders, including state governments and public sector undertakings (PSUs), in this process.
Impact of the Pay Commission
Implementation of Pay Commission recommendations leads to increased salaries for employees, boosting consumption. However, it also imposes a significant financial burden on state governments, public sector undertakings (PSUs), and central universities, as pay revisions are generally in line with those of the central government. Although the Pay Commission’s recommendations are not binding on the central government, they are often accepted with minor changes. The Commission advises on the pay structure, allowances, pensions, and other benefits for central government employees.
The impact of the 8th Pay Commission will be incorporated into the new Medium-Term Fiscal Roadmap and the recommendations of the 16th Finance Commission. The 16th Finance Commission will determine tax sharing and grants to states for FY27 to FY31 (2027-2031). This will also benefit millions of state government employees, who typically follow the central government’s pay commission for salary revisions.
