Modi cabinet approves terms of reference for 8th Pay Commission
What's the story
The Union Cabinet has approved the Terms of Reference (ToR) for the 8th Pay Commission. Justice Ranjana Prakash Desai, a former Supreme Court judge, will chair the commission. Professor Pulak Ghosh will serve as a part-time member while Pankaj Jain, currently Secretary of Petroleum and Natural Gas, will be its Member-Secretary. The 8th Pay Commission will revise salaries for nearly 50 lakh central government employees and allowances for about 69 lakh pensioners.
Timeline
Recommendations expected sometime next year
The 8th Pay Commission is expected to submit its recommendations within 18 months. The implementation of these recommendations will likely be done after government approval. The commission was approved in January this year and the ToR was finalized after consultations with various ministries and state governments.
Future projections
Minimum basic pay likely to rise to ₹30,000
The 8th Central Pay Commission (CPC) is likely to be implemented in late 2026 or early 2027. Kotak Institutional Equities estimates the minimum basic pay under this commission could rise to ₹30,000 from the current ₹18,000. The report also indicates that the CPC may adopt a fitment factor of 1.8, translating into an overall real pay hike of about 13%.
Financial implications
Fiscal impact estimated at around 0.8% of GDP
Kotak estimates the fiscal impact of the 8th Pay Commission to be around 0.8% of GDP, which could add ₹2.4-3.2 lakh crore burden on the national exchequer. The commission is usually constituted by the government every decade or so to revise government employees' remuneration. The last such body, the 7th Pay Commission, was formed in February 2014 and its recommendations were implemented from January 1, 2016.