The central government has officially confirmed its decision to constitute the 8th Central Pay Commission (8th CPC).
The announcement, made during the Monsoon Session of Parliament, marks the first formal step toward revising compensation structures under the next pay cycle.
The 8th CPC is expected to affect approximately 50 lakh central government employees and 65 lakh pensioners.
A large portion of the impact will be felt by Group C employees, who make up nearly 90% of the workforce and are likely to benefit more due to their relatively higher spending needs.
8th Pay Commission: Government Confirmation and Stakeholder Consultations
In response to queries raised by Members of Parliament T.R. Baalu and Anand Bhadauria, Minister of State for Finance Pankaj Chaudhary stated that the government has initiated the process of setting up the 8th CPC.
Inputs are being sought from key stakeholders, including the Ministry of Defence, Ministry of Home Affairs, Department of Personnel & Training, and various state governments.
However, the government clarified that a formal notification for the commission is still pending.
The Chairperson and Members of the 8th CPC will be appointed only after this notification is issued.
Implementation Timeline and Historical Context
Historically, pay commissions follow a 10-year cycle.
The 7th Pay Commission was constituted in February 2014 and its recommendations were implemented from January 1, 2016.
Following this precedent, the 8th CPC is expected to be rolled out by January 1, 2026, although no official timeline has been confirmed.
The commission must first submit its report outlining the proposed pay and pension revisions.
The government will then formally approve these recommendations before implementation begins.
8th Pay Commission: Expected Salary Revisions and Fitment Factor
Media reports suggest that the fitment factor—used to calculate revised basic pay—could range between 1.8 and 2.86.
However, the government has not released any official figures regarding salary hikes yet.
This is lower than the 2.57 multiplier adopted during the 7th CPC.
If a 1.8 multiplier is accepted, the minimum basic pay may rise from ₹18,000 to ₹32,000.
However, the actual increase in take-home salary would be lower because the Dearness Allowance (DA) will reset under the revised framework.
The average salary hike is projected to be around 13%, slightly below the 14.3% increase granted during the previous cycle.
Dearness Allowance and Inflation Adjustments
The government currently revises DA twice a year, in January and July, based on the All-India Consumer Price Index for Industrial Workers (CPI-IW).
This mechanism is expected to continue even after the 8th CPC is implemented.
DA is projected to exceed 60% of the basic pay by the time the new pay structure is introduced. Under the revised framework, it will reset to zero before being recalculated.
Budgetary Implications and Fiscal Planning
Kotak Institutional Equities estimates that the cost of implementing the 8th CPC could range between ₹2.4 lakh crore and ₹3.2 lakh crore.
This is significantly higher than the ₹1.02 lakh crore spent during the rollout of the 7th CPC in FY2017.
The government has not yet made any budgetary allocations for the 8th CPC, raising concerns about potential delays.
However, officials have indicated that the financial impact will be considered in future fiscal planning.
Note: We are also on WhatsApp, LinkedIn, Google News, and YouTube, to get the latest news updates. Subscribe to our Channels. WhatsApp– Click Here, Google News– Click Here, YouTube – Click Here, and LinkedIn– Click Here.
