The Union Cabinet, under the leadership of Prime Minister Narendra Modi, has given the green light to the terms of reference for the Eighth Pay Commission. This pivotal decision marks the commencement of proceedings to adjust the salaries and pensions for approximately 12 million individuals, including central government employees and pensioners, effective from January 1, 2026.
While the commission is expected to deliver its recommendations within 18 months of its formation, the salary and pension increases are likely to be applied retrospectively. Information and Broadcasting Minister Ashwini Vaishnaw stated at a press briefing that the precise implementation date would be confirmed upon receipt of the interim report, but January 1, 2026, is the anticipated effective date.
The commission will be chaired by retired Supreme Court judge Ranjana Prakash Desai. Professor Pulak Ghosh from IIM Bangalore will serve as a part-time member, with Petroleum Secretary Pankaj Jain as the member secretary.
To provide context, the Seventh Pay Commission had previously recommended a 23.55% increase in salaries and allowances for government employees, which took effect on January 1, 2016. It also suggested a 24% rise in pensions, with an annual increment of 3%.
The recommendations of the Pay Commission are a subject of considerable interest, not only for central government employees but also for many state governments that often align their own pay scales accordingly. A key focus for the Eighth Pay Commission will be its determination of the ‘fitment factor’—a multiplier used to adjust salaries, building on the Seventh Pay Commission’s factor of 2.57. The commission will also aim to ensure government salaries and pensions are competitive and equitable, a consideration that extends to armed forces personnel and pensioners.
In formulating its recommendations, the commission is tasked with considering the nation’s economic conditions and the necessity of fiscal prudence, as outlined by the Finance Ministry. It will also evaluate prevailing salary structures in the private sector and assess the financial implications for state governments.
The commission is expected to submit its findings within 18 months of its establishment and may present interim reports as recommendations are finalized.
The Eighth Central Pay Commission was formally constituted on January 16, with the objective of revising the pay scales for around 5 million central government employees and 6.9 million pensioners. The Central Pay Commissions have a long-standing role since 1947 in reviewing and recommending changes to the salaries, retirement benefits, and service conditions of central government employees, often influencing state government policies as well.
Recalling the Seventh Pay Commission’s timeline, it was constituted in February 2014, submitted its report in November 2015, and its recommendations were largely approved by the Cabinet in June 2016. The financial impact of its recommendations was estimated at ₹1,02,100 crore for FY 2016-17, with pay and pension revisions implemented from January 1, 2016, and allowances later in July 2017.
The Central Secretariat Service Forum (CSS Forum) has expressed gratitude for the government’s decision, highlighting their consistent advocacy for the commission to ensure timely revisions. The Forum anticipates that the benefits of the Eighth Pay Commission will be implemented from January 1, 2026, for all central government employees.