The Union Cabinet approved the formation of the 8th Central Pay Commission in January 2025, setting the wheels in motion for an impending review of salaries and pensions of approximately 11 million central government employees and pensioners, respectively. Although the formation of the commission has been approved, the Commission is yet to be constituted, as the ToR needs to be finalized, and the appointments of a chairman and members are also being finalized. Stakeholder consultations with key Ministries are ongoing.
Fitment Factor And Salary Hike Projections
Under the 8th Pay Commission, the fitment factor will be central to the determination of salary hike, which is the multiplier against the existing basic pay. It has been speculated that there may be a hefty increase in the range of 30% to 34%, depending on where the fitment factor finally stands, which has been estimated anywhere upwards from 1.8 to 3.0.
Expected Timeline For Increases In Salaries
Reports state that implementation is to take place in late 2026 or early 2027. This is based on reports from the Parliament and comparisons with previous commissions. The government, however, wants the process to be completed faster this time, but there is always some possibility for delay, unlike the 7th Pay Commission, which took nearly three years from announcement to implementation.
An Incentive To The Economy: More Money To Spend
Higher disposable income for the central government employees and pensioners is likely to translate into increased spending power, which, in turn, would enable the economy to develop in areas as diverse as retail, automobile and consumer-goods. This means that the influence of the Commission could extend beyond government payrolls.
Demand For Immediate Inclusion Heralded By Protests
Certain central-employee groups—like Gramin Dak Sevaks—have risen in protest, believing themselves to be left out of discussions and demanding to be included in the new pay structure. Among the key demands are that a certain percentage of Dearness Allowance be merged with basic pay and that they be covered under the new commission, too.
Also Read: Government Announces DA Hike 2025: Big Relief For Employees And Pensioners