8th Pay Commission likely to commence operations in April

The government is nearing the establishment of the Eighth Pay Commission, with its terms of reference expected to be sent for cabinet approval by early next month. A formal notification will follow once the cabinet clears it, enabling the commission to commence operations in April, a senior government official said.

The Finance Ministry had sought suggestions from the Ministry of Defence, Ministry of Home Affairs, and Department of Personnel and Training (DoPT) on which aspects the Commission should make recommendations on. A top government official told ‘Moneycontrol’ that some suggestions have been received and the rest are awaited. The commission will be notified as soon as it gets approval from the Cabinet.

The Eighth Pay Commission is set to commence operations once its terms of reference are finalized, according to an official. If established by the month of April, it is expected to submit its report by March 2026, though the process could conclude in less than a year. Historically, previous pay commissions have taken over a year to finalize their recommendations.

The pay revisions proposed by the Eighth Pay Commission will affect more than 50 lakh central government employees and pensioners, including defense personnel. This will have a significant financial impact, similar to the Seventh Pay Commission’s implementation in 2016, which led to an estimated increase of Rs 1 lakh crore in government expenditure for FY17. However, the financial implications of the Eighth Pay Commission will be felt only from FY27 onward.

Meanwhile, the government has ruled out merging 50% of the Dearness Allowance (DA) and Dearness Relief (DR) with basic pay and pensions for now. Minister of State for Finance Pankaj Chaudhary clarified this in response to a question in the Rajya Sabha on March 20.