8th Pay Commission impact not soon, central govt employees need to wait till FY27

The central government employees and pensioners anticipating salary hikes under the newly approved 8th Pay Commission will not see any financial impact until at least the financial year of 2027 due to procedural timelines and the absence of budget allocations for the revisions in the upcoming fiscal year.

On January 16, 2025, Union Minister Ashwini Vaishnaw confirmed that the Union Cabinet, led by PM Narendra Modi, had approved the formation of the 8th Pay Commission. However, he did not disclose the timeline for appointing its chairperson and members.

The 8th Pay Commission aims to revise salaries and pensions for over 50 lakh employees and 65 lakh pensioners. However, the 2025-26 Budget did not allocate funds for its implementation, as the commission’s report is unlikely to be finalized before March 2026, reported Money Control by citing a senior Finance Ministry official.

The reports also added that the Finance Ministry is still finalizing the commission’s scope with ministries like Defence, Home Affairs, and Personnel. As a result, the panel can only start work after these guidelines are approved and the earliest for these is March 2026.

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Even if the report is approved in FY27, any backdated benefits from January to March 2026 will be added to the FY27 budget and the expenses will be carried over to the 2026-27 fiscal year, clarified the reports.

What is the 8th Pay Commission?

Approved by the Union Cabinet on January 16, 2025, the 8th Pay Commission is expected to propose a 2.86 times “fitment factor” (a multiplier to calculate revised salaries).

Central government employees will see a jump in pay up to 2.57 times under the current 7th Pay Commission. As such, it could raise the minimum basic salary from Rs 18,000 to Rs 51,480 and pensions from Rs 9,000 to Rs 25,740. Higher-grade employees, like entry-level IAS officers, might see salaries jump to Rs 1.6 lakh per month.

Why No Interim Relief?

The government has not announced a Dearness Allowance (DA) hike in 2024, sparking speculation about the 8th Pay Commission. However, officials stress that DA adjustments (linked to inflation) are separate from pay commission revisions.

Historical Context of Pay Commissions

Pay commissions are set up every decade to align salaries with economic conditions. The 7th Pay Commission, implemented in 2016, cost the government Rs 1.02 lakh crore annually. While the 8th Commission’s financial impact remains unclear, officials emphasize that its recommendations will only materialize after FY27.

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In conclusion, despite the 8th Pay Commission’s approval, central employees face a two-year wait due to bureaucratic processes and fiscal planning. The earliest they can expect revised salaries or pensions is April 2026, with arrears likely stretching into FY27. For now, the focus remains on finalizing the panel’s framework and awaiting its report.