The commission may be formed soon.
Government employees may soon get some good news. The central government will announce the 8th Pay Commission next week (8th Pay Commission) can be formed. This step is being taken just before the Bihar Assembly elections and about ten months after the cabinet approval.
This commission will recommend setting new salary and pension rules for central employees and pensioners i.e. about 1 crore 18 lakh (11.8 million) people. According to media reports, the government has decided the Terms of Reference (ToR) of the Commission, i.e. the scope of work, names of the Chairman and members, who will monitor the process of salary and pension revision to be held every ten years.
This step is being taken with a delay of about a year compared to earlier pay commissions. The commission may take 6 to 12 months to prepare its report. After the implementation of the report, its effects will be considered retroactive to January 1, 2026. Prime Minister Narendra Modi had approved the formation of the 8th Pay Commission on January 16, 2025, just before the Delhi Assembly elections. The government has also taken suggestions from all key stakeholders including state governments and public sector companies (PSUs) in this process.
effects of pay commission
With the implementation of Pay Commission recommendations, the salaries of employees increase, which increases consumption. But at the same time, it imposes a huge financial burden on state governments, PSUs and central universities, as pay revisions are usually done as per the Centre’s guidelines. Although the recommendations of the Pay Commission are not binding on the Central Government, in most cases they are accepted with minor changes. The Commission advises on the pay structure, allowances, pension and other benefits of central employees.
Also read- Big update on 8th pay commission, will your salary increase this time?
Example of 7th Pay Commission
The 7th Central Pay Commission was constituted on 28 February 2014, which was given a time of 18 months. It came into effect from January 1, 2016, and led to a 23.55% increase in pay and pension. This resulted in an additional burden of approximately Rs 1.02 lakh crore (0.65% of GDP) on the government annually, due to which it became difficult to reduce the fiscal deficit from 3.9% to 3.5%.
Financial impact of 8th Pay Commission
The impact of the 8th Pay Commission will be added to the new medium-term fiscal roadmap and the recommendations of the 16th Finance Commission. The 16th Finance Commission will decide tax sharing and grants to the states for FY27 to FY31 (2027–2031). Along with this, lakhs of employees of state governments will also be benefited, as they usually follow the Pay Commission of the Central Government for salary reforms.