8th pay commission
Good news for government employees, according to a report released on July 9 by Ambit Capital, the 8th Pay Commission can be implemented in FY 2026-27 (FY27) and this can increase the salary and pension of government employees and pensioners by 30-34%. According to the report, about 1.12 crore employees and pensioners of the central government will get the benefit of this revised salary and pension, which will bring additional money to spend in the market and this will promote consumption.
Which sectors will benefit?
Embit believes that this will benefit well to sectors like passenger vehicles (vehicles), BFSI (Banking and Finance), FMCG (faster sold goods) and QSR (Fast Food Chains). However, how big this benefit will be, it will depend on how much the actual increment is, which fitment factor is used and when the commission applies. If it is delayed, the employees can get more money in the form of arrears (arrears), which can increase the ability to spend at one time.
Chances of increasing salary from 14% to 54%
According to the report, salary is expected to increase by up to 14% at the lower level and up to 54% at the upper level. This will put an additional burden of Rs 1.3 lakh crore on the government. According to the report of brokerage, the government will need additional financial assistance of Rs 1.3 lakh crore for these increase. For this, the government may have to take steps such as cuts in capital expenses, improvement in GST rates, or more dependence on dividend from PSU companies. Especially when tax earnings are slowing down and the expenses are already decided.
How effective was the 7th Pay Commission?
The 7th Pay Commission (from January 2016 to December 2025) had increased an average of just 14% salary, which was the lowest after 1970. In the previous pay commissions (6th and 7th), the government had cut CAPEX to handle revenue expenses (Revex). Now that tax is slowing down from tax (especially from income tax), the government will need measures like completing the CAPEX through PSUs, depending on dividend and GST improvement.
Change in pension too
Under the Unified Pension Scheme, which is implemented from FY26, the government’s stake in pension fund has increased from 14% to 18.5%. Out of this, 8.5% is such that the government can put in different investment means of its own will. If the government adopts 45% of this money by adopting international criteria, then investment in the stock market can increase from Rs 24,500 crore to Rs 46,500 crore, which will be around 7.7% of FY25’s net domestic flow.