8th pay panel payout likely to trigger rate hike cycle in FY27: Report

Payout with sizeable arrears will hit core inflation harder, as it propels demand for goods and services overtime, and leads to an instantaneous reset of housing rents

The Eighth Central Pay Commission (CPC) payouts are likely to tilt the growth-inflation balance somewhat ‘unfavourably’ and kick off the Reserve Bank of India's (RBI's) rate hike cycle in late FY27 or FY28, says a recent report by private think tank QuantEco Research. 

 

According to the report, the Eighth CPC is facing administrative delays. And, the final implementation by the commission may see a lag of at least one year. This implies that revised payouts will be disbursed with sizeable arrears.

 

This will have implications for growth as well as inflation. 

 

Payout with sizeable arrears will hit core inflation