8th Pay Commission: Big Salary Boost Ahead? 1 Crore Govt Staff And Pensioners Could Get 30–34% Hike - Details

8th Pay Commission: Over 1.2 crore central government employees and pensioners could soon see a big jump in their salaries and pensions. According to a recent report by brokerage firm Ambit Capital, the upcoming 8th Pay Commission is expected to recommend a hike of 30–34% in effective take-home pay.

This is more than double the 14% increase seen under the 7th Pay Commission in 2016.

Possible Timeline and Delay

The 8th Pay Commission has not yet been officially formed. Earlier, it was expected that the new pay scales would start from January 2026, but there has been little progress on setting up the panel or finalising the Terms of Reference (ToR). As a result, experts believe the implementation could now be delayed to the financial year 2026–27 (FY27).

Ambit’s report noted, "We expect the 8th Pay Commission to announce a hike of 30–34% for salaries and pensions to cover 11 mn beneficiaries to boost consumption.”

What Is Driving This Big Hike?

One of the main reasons for the expected large increase is the fitment factor, which is a multiplier used to fix the new salaries. While the 7th Pay Commission had a fitment factor of 2.57, Ambit Capital expects the 8th Pay Commission to use a factor between 1.83 and 2.46.

For example, under the 7th Pay Commission, the minimum basic salary rose from Rs 7,000 to Rs 18,000, but the effective increase was only about 14% after resetting the Dearness Allowance (DA). In the new revision, even after resetting DA to zero, the hike is likely to be much higher.

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Expected Impact on Government Finances

Ambit estimates that the salary and pension revision will cost the government Rs 1.3–Rs 1.8 lakh crore every year. This is significantly more than the Rs 1.02 lakh crore spent during the 7th Pay Commission rollout in FY17.

The report also said, “This increase will have a direct impact on GDP up to 30–50 basis points and will boost consumption.”

Benefits for Pensioners

Pensioners will also get higher basic pay and DA increases. However, since they are not eligible for allowances like HRA, the percentage hike in their total income will be slightly lower compared to working employees. Ambit noted that from FY26, under the new Unified Pension Scheme (UPS), pensioners will be guaranteed 50% of their last-drawn salary as a base pension.

Why Is a Pay Commission Needed?

Every 10 years, a pay commission is formed to revise salaries and pensions to keep them in line with the private sector and retain talent in government service. Ambit’s report highlights that this process not only updates pay structures but also boosts economic activity.

The higher payouts are expected to increase consumer spending across sectors like FMCG, banking, retail, and automobiles.