The 8th Pay Commission is expected to recommend a 30–34% hike in basic salaries for central government employees and pensioners. With a revised fitment factor between 1.83 and 2.46, the new pay structure could significantly boost take-home salaries. However, the rollout may be delayed until FY 2026–27 due to procedural and budgetary hold-ups.
The 8th Central Pay Commission, which will determine revised salaries for central government employees and pensioners, is expected to recommend a substantial 30–34% increase in basic pay, according to a report by Ambit Capital. This potential hike is significantly higher than the ~14% revision introduced during the 7th Pay Commission.
The increase will be driven by a revised fitment factor, expected to fall between 1.83 and 2.46. This factor multiplies an employee’s current basic pay to determine their new salary structure. However, as with previous commissions, the Dearness Allowance (DA) will be reset to zero upon implementation and begin accumulating again based on inflation.
What’s Changing in Salary Structure?
Currently, the salary composition for government employees includes approximately 52% basic pay, 31% DA, 15% House Rent Allowance (HRA), and 2% transport and other allowances. With the new structure, these percentages may shift, especially in the early phase when DA is reset.
Although the 8th Pay Commission is scheduled to take effect from January 1, 2026, delays in forming the commission, finalizing its Terms of Reference, and the absence of budgetary allocation in FY 2025–26 suggest that actual implementation could be pushed to FY 2026–27. A similar delay occurred during the 7th Pay Commission, where implementation was backdated but took nearly two years to roll out fully.
Who Will Be Impacted and How?
The expected financial impact on the exchequer could be between ₹1.3 lakh crore and ₹1.8 lakh crore. This could positively influence domestic consumption, potentially lifting India’s GDP by 30–50 basis points, according to Ambit Capital’s projections.
The revision will affect around 11.2 million people — including 4.4 million active central government employees and 6.8 million pensioners. However, pensioners may benefit less in real terms since they do not receive allowances like HRA and transport benefits.
While employees and pensioners can expect a healthy pay raise, experts advise caution in anticipating immediate changes. Arrears for the delayed period may be paid retrospectively, as seen in previous commissions, but the rollout could extend well into 2027.
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