The 8th Pay Commission, which received the Union Cabinet’s nod back in January, is expected to be formally constituted next week, a report said on Monday, citing persons privy to the development.
The Centre has likely finalised the Terms of Reference (ToR) for the panel, while also finalising its chairman and members, the Financial Express report said, quoting sources. There was no official confirmation yet.
As per the report, the 8th Pay Commission will likely take around 6-12 months to submit its recommendations to the Centre. According to the precedent, the commissions consult all stakeholders before finalising their report that entails the fitment factor and other modalities for pay revision.
The salary hike, however, is likely to come into effect retrospectively from Jan. 1, 2026, the publication said. Members of the staff side of National Council-Joint Consultative Machinery (NC-JCM), while speaking to NDTV Profit in August, also expressed confidence that the salary hike would be effective from the start of next year, irrespective of the delay in rollout.
The employees would be paid arrears for the period starting Jan. 1, 2026, NC-JCM (staff side) Secretary Shiv Gopal Mishra had said. This was also the case with the 7th Pay Commission, when the salaries were rolled out from July 2016, but arrears were paid from January 2016.
The formation of the 8th Pay Commission will end the months-long wait for over one crore central government employees and pensioners. While the pay panel was formed 10 months ago, there has been no official word yet on the finalisation of ToR.
The ToR will serve as a broad framework for the pay panel. The staff side of NC-JCM, which is the top forum representing central government employees and pensioners, had submitted its draft ToR to the Centre in January itself.
In the document, the forum said that the minimum salary should be calculated by considering the basic consumption needs of five members, instead of three at present, as taking care of aging parents is also an ethical and legal responsibility.
The staff side of NC-JCM also called for the merger of “unviable” pay scales, by combining level 1 with level 2, level 3 with level 4 and level 5 with level 6. This is necessary to prevent pay stagnation, which indirectly affects the Modified Assured Career Progression Scheme.
Notably, the formation of 8th Pay Commission has already been delayed as compared to the 7th Pay Commission. The latter was formed in February 2014, and it submitted its report after 18 months. The revised salaries were eventually rolled out in July 2016.
If one goes by a similar timeline, then the 8th Pay Commission may end up submitting its report in 2027. However, employee union leaders who spoke to NDTV Profit earlier said the pay panel may act in an expediated manner this time, in order to accelerate the rollout of the revised salaries and pensions.
Notably, the last pay commission had used a fitment factor of 2.57 to raise the salaries and pensions. This meant that the basic pay and the basic pension were multiplied with 2.57. However, since the dearness allowance and dearness relief were reset to zero, the effective hike was of around 23.5%.
This time as well, the DA and DR — presently standing at 58% of the basic wage — would be reset to zero once the 8th Pay Commission comes into effect.
The once-in-a-decade salary overhaul also has a fiscal impact, with the 7th Pay Commission adding a burden of Rs 1.02 lakh crore on the exchequer back in FY17. The impact is expected to be sharper when the 8th Pay Commission is rolled out.
Despite the fiscal burden, the rollout of pay commissions are seen positively from an economic prism, as the rise in disposable income provides a boost to consumption.
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