Cabinet Approves Terms Of Reference Of 8th Pay Commission: How Much Will Salaries Of Central Govt Employees Rise?

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday approved the terms of reference for the 8th Central Pay Commission (CPC), which will review salaries, pensions, and service conditions of central government employees and pensioners.

The 8th CPC will cover nearly 50 lakh central government employees, including Defence Services Personnel, and around 69 lakh pensioners. The Commission has been tasked with reviewing pay structures, allowances, benefits, and retirement schemes to ensure alignment with current economic conditions.

The Commission will function as a temporary body and is expected to submit its recommendations within 18 months from the date of its constitution. It will comprise one chairperson, one part-time member, and one member-secretary.

The body may also submit interim reports on specific issues if needed before finalising its recommendations.

8th Pay Commission: Key Considerations

The Cabinet outlined several factors that the Commission must consider while making its recommendations:

Economic conditions and fiscal prudence: Ensuring recommendations do not strain the national economy.

Development and welfare needs: Adequate resources must be available for government spending on developmental projects and social welfare schemes.

Pension obligations: Evaluating the unfunded cost of non-contributory pension schemes.

Impact on state finances: State governments often adopt central pay commission recommendations with modifications.

Comparison with other sectors: Reviewing the existing emoluments, benefits, and working conditions in Central Public Sector Undertakings and the private sector.

8th Pay Commission: Expected Salary Hikes

According to Hindustan Times, the 8th Central Pay Commission is yet to announce the official salary structure, but early estimates suggest that central government employees could receive a monthly hike of up to Rs 19,000, based on a likely fitment factor of 2.86. 

For example, a mid-level government employee currently earning around Rs 1 lakh per month could see their salary increase depending on the government’s final budget allocation.

If the allocation stands at Rs 1.75 lakh crore, the salary might rise to Rs 1.14 lakh per month, marking a 14% hike. With a Rs 2 lakh crore budget, the pay could reach Rs 1.16 lakh, representing a 16% rise, while a Rs 2.25 lakh crore allocation may push the monthly pay to Rs 1.18 lakh, an increase of over 18%.

The 8th Pay Commission is expected to be set up by April 2025, with its recommendations likely coming into effect between 2026 and 2027. 

The final hike will depend on economic conditions and the government’s fiscal capacity at the time of implementation.

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