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The approval of the 8th Pay Commission is expected to bring relief to millions of employees and pensioners. If estimates prove correct, central government employees could see an average salary increase of 14–18%, significantly improving their purchasing power and standard of living.
PM Modi-led Cabinet Clears 8th Pay Commission
New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Terms of Reference (TOR) for the formation of the 8th Central Pay Commission. This decision has initiated the process of major changes in the salary, allowances, and pension structure for over 11.8 million central government employees and pensioners.
Following this long-pending decision, the decadal revision of salaries, allowances, and pensions has now formally begun. The new pay scales are expected to be implemented retroactively from January 1, 2026.
Cabinet approves 8th Pay Commission, 50 lakh employees to benefit; Details here
The Commission will be required to submit its recommendations to the government within 18 months of its formation. Its mandate will be to review the existing salary structure, allowances, and pension formula. The Commission will also prepare a report taking into account fiscal balance and the financial impact on states, as most state governments adopt the central government's recommendations.
The 7th Pay Commission set a fitment factor of 2.57. This time, the 8th Pay Commission may recommend a fitment factor of 2.86. This is the same factor used to determine employees' new basic pay.
For example, if an employee's current basic pay is Rs 18,000, it could reach Rs 51,480 (18,000 × 2.86) after the new commission's implementation. This means that employees at all levels could see an additional salary increase of Rs 18,000 to Rs 19,000.
While the final increase will depend on the government's budgetary allocation, estimates suggest that mid-level employees could receive the following benefits:
14% increase: If the government allocates a budget of approximately Rs 1.75 lakh crore, an employee earning a basic salary of Rs 1 lakh will receive a salary increase of Rs 1.14 lakh.
16% increase: With a budget allocation of Rs 2 lakh crore, this salary could reach Rs 1.16 lakh.
18% or more increase: If the budget reaches Rs 2.25 lakh crore, the basic salary could reach Rs 1.18 lakh or more.
Big announcement by Modi government, 8th pay commission can bring big changes
Adjustments will be made to the salary increase, along with the dearness allowance (DA), house rent allowance (HRA), and travel allowance (TA). Since these allowances are linked to the basic salary, their value will automatically increase with the increase in basic pay.
The Commission has not yet begun its work. However, sources indicate that the government may target submitting its report by mid-2025 so that the new pay scale can be implemented in early 2026.
The approval of the 8th Pay Commission is expected to bring relief to millions of employees and pensioners. If estimates prove correct, central government employees could see an average salary increase of 14–18%, significantly improving their purchasing power and standard of living.
