Union Cabinet Approves 8th Pay Commission: Check Who Will Benefit and What to Expect
The Union Cabinet, chaired by Prime Minister Narendra Modi, has officially approved the establishment of the 8th Pay Commission to revise the salaries and pensions of central government employees and pensioners. This decision, announced by Union Minister Ashwini Vaishnaw, is expected to bring significant relief to over 49 lakh employees and 65 lakh pensioners, especially as inflation continues to impact household budgets.
Boost to Consumption and Quality of Life
Prime Minister Modi expressed optimism about the impact of this move, stating, “The Cabinet’s decision on the 8th Pay Commission will improve quality of life and give a boost to consumption.” In a post on X (formerly Twitter), he acknowledged the dedication of government employees to building a “Viksit Bharat” (Developed India).
What is the Pay Commission?
The central government constitutes a pay commission roughly every decade to revise salary structures for its employees. These commissions also decide pension structures and additional allowances, ensuring wages and pensions remain aligned with economic conditions. The 7th Pay Commission, implemented in 2016, raised the minimum basic salary from ₹7,000 to ₹18,000 and the minimum pension from ₹3,500 to ₹9,000. Its term will end in 2026.
Public sector undertaking (PSU) employees, autonomous bodies, and gramin dak sevaks fall outside the purview of the pay commission and follow separate pay scales.
#WATCH | Delhi: Union Minister Ashwini Vaishnaw says, "Prime Minister has approved the 8th Central Pay Commission for all employees of Central Government…" pic.twitter.com/lrVUD25hFu
— ANI (@ANI) January 16, 2025
Expected Changes Under the 8th Pay Commission
While the details are yet to be finalized, experts predict a significant increase in pensions and salaries. The fitment factor, a key multiplier used to calculate revised pay, is likely to range between 2.5 and 2.86, potentially increasing pensions by 20–30%. For instance, if the current pension is ₹30,000 and the fitment factor is set at 2.5, the revised pension could rise to ₹75,000.
Ritika Nayyar, Partner at Singhania & Co, commented, “The 8th Pay Commission may provide an average pension hike of 20% to 30%, depending on economic conditions and budgetary constraints.” Experts also suggest additional allowances for senior pensioners and enhanced dearness relief (DR) to offset inflation.
Timeline and Consultation Process
The government will soon appoint a chairman and two members to the commission. Consultations will be held with central and state governments and other stakeholders to define the commission’s terms of reference (ToR). The final recommendations will be implemented after thorough review and approval.
A Timely Relief
The announcement comes ahead of the Union Budget 2025 and is seen as a timely move to address inflationary pressures. The revised pay structure is expected to not only improve the financial well-being of employees and pensioners but also stimulate domestic consumption, contributing to broader economic growth.
