8th Pay Commission: Centre To Finalise Terms, Cabinet Approval Likely Soon

New Delhi: The central government is making significant strides towards the establishment of the 8th Pay Commission, with its terms of reference set to be sent for cabinet approval by early next month. 

Once cleared by the Cabinet, a formal notification will follow.

The Finance Ministry has been seeking suggestions from key ministries including the Ministry of Defence, Ministry of Home Affairs, and the Department of Personnel and Training (DoPT) regarding the areas that the Commission should address in its recommendations. 

A top government official reportedly said that several suggestions have already been received, with more expected soon. 

What Is the Expected Timeline?

The Eighth Pay Commission is anticipated to begin its operations once the terms of reference are finalized. If the Commission is established by the end of this month, it is expected to submit its report by March 2026. 

However, the entire process may conclude sooner than a year, as has been the case with previous pay commissions. 

Potential Impact on Employees and the Economy

The revisions proposed by the Eighth Pay Commission are expected to affect over 50 lakh central government employees and pensioners, including defense personnel. Like the Seventh Pay Commission’s implementation in 2016 which resulted in an estimated Rs 1 lakh crore increase in government expenditure for FY17 the financial impact of the Eighth Pay Commission will be substantial. However, the fiscal implications will primarily be felt starting in FY27.

The pay revisions will also likely spur economic growth by stimulating consumption among government employees, enhancing their quality of life.

No Merger of DA with Basic Pay, for Now

In a related development, the government has ruled out merging 50% of the Dearness Allowance (DA) and Dearness Relief (DR) with basic pay and pensions at this time. Minister of State for Finance, Pankaj Chaudhary, addressed this in a statement in the Rajya Sabha on March 20, clarifying that there are no current plans to implement such a change.