8th Pay Commission: Finance Minister Nirmala Sitharaman will present the Union Budget for the financial year 2026-27 on Sunday, February 1st. This is the first time Sitharaman will present the budget on a Sunday. People from all walks of life have high hopes for this budget. Central government employees, in particular, are closely watching the Finance Minister’s speech. The budget is being presented nearly three months after the formal formation of the Eighth Pay Commission.

In fact, the Pay Commission has been given an 18-month deadline to submit its report. If the central government decides to allocate an amount to cover the financial impact of revised salaries and pensions, speculation about the rapid implementation of the Eighth Pay Commission’s recommendations will intensify. The total number of central government employees and pensioners exceeds 11 million. These individuals are awaiting the implementation of the Eighth Pay Commission’s recommendations. If the budget provides some positive signals, the Pay Commission could submit its report well before the deadline, which ends in May 2027.

Impact on the treasury

The implementation of the 7th Pay Commission had an impact of approximately Rs 1.02 lakh crore on the exchequer in 2017. At that time, basic pay and pensions were revised using a fitment factor of 2.57 (157%). It will be important to see the fitment formula for the 8th Pay Commission. Even if the fitment factor is lower, the impact on the exchequer under the 8th Pay Commission will be greater. Last year, Kotak Institutional Equities estimated a potential fitment factor of 1.8, suggesting that the fiscal impact of the entire process could be between Rs 2.4-3.2 lakh crore.