 "Govt approves 8th Pay Commission ahead of Budget 2025: What we know so far")
Prime Minister Narendra Modi has approved the formation of the Eighth Pay Commission for central government employees, a major announcement made by Union Minister Ashwini Vaishnaw during a cabinet briefing on Thursday. The decision comes just two weeks before the Union Budget presentation for the financial year 2025-26 (FY26).
Here is a closer look at what this pay commission is and what it means:
What is the 8th Pay Commission?
The pay commission plays an important role in determining the salaries, allowances, and pensions of central government employees and pensioners. Its recommendations are expected to bring about an increase in remuneration and benefits.
When will the 8th Pay Commission be set up?
The term of the current (seventh) pay commission, implemented in FY17, is set to end in 2026. Therefore, the ‘8th Central Pay Commission’ is expected to be implemented from January 1, 2026.
Why the early formation?
Union Minister Vaishnaw said that by setting up the eighth pay commission in advance, the government aims to have enough time to review and implement its recommendations. “This proactive approach will help ensure timely revisions and adjustments,” Vaishnaw explained.
The early establishment aligns with the government’s strategy to address economic indicators such as inflation and ensure fair compensation for its workforce. The decision also responds to demands from central trade unions, who had called for the immediate formation of the new pay commission during pre-Budget consultations.
Impact of the 8th Pay Commission
According to Vaishnaw the eighth pay commission will impact around 4.5 million central government employees and 6.8 million pensioners, including defence personnel. In Delhi alone, around 400,000 employees, including those from the Delhi government, stand to benefit.
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This move comes as Delhi prepares for upcoming elections on February 5, highlighting the potential political and economic significance of the decision.
Government sources also anticipate that the new pay commission will not only improve the living standards of government employees but also provide a substantial boost to consumption and economic growth, according to a report by The Financial Express. The seventh pay commission had resulted in an expenditure increase of Rs 1 trillion.
Who is in charge of the 8th Pay Commission?
The government will soon appoint a chairperson and two members to lead the eighth pay commission. Consultations with state governments and other stakeholders, including public sector units, are also on the agenda to ensure comprehensive and inclusive recommendations.
Prime Minister Modi expressed pride in the contributions of government employees, emphasising that the new Pay Commission will enhance their quality of life and stimulate consumption. In a post on X, Modi said, “The Cabinet’s decision on the 8th Pay Commission will improve quality of life and give a boost to consumption.”