8th Pay Commission gets Cabinet's nod; over 1.1 crore central govt employees, pensioners to benefit

The decision to set up the 8th Pay Commission was taken by Prime Minister Narendra Modi, Information and Broadcasting Minister Ashwini Vaishnaw said at a press briefing.

He said the chairman and two members of the commission will be appointed soon, adding that consultations will be held with central and state governments and other stakeholders.

In a post on X, Prime Minister Narendra Modi said the Cabinet's decision on the 8th Pay Commission will "improve quality of life and give a boost to consumption."

The Pay Commission reviews and recommends changes to the salaries and benefits of central government employees.

Its recommendations not only affect lakhs of central employees and pensioners but also provide a blueprint for the state governments.

Why 8th Pay Commission

The 7th Pay Commission was constituted in 2014, and its recommendations were implemented in 2016. The pay panel recommended a fitment factor of 2.57 that raised the minimum basic pay from ₹7,000 to ₹17,990. Its term ends in 2026.

Since 1947, the government has constituted seven pay commissions, with the last one's recommendations implemented in 2016.

"As the 7th Pay Commission's term concludes in 2026, initiating the process in 2025 ensures sufficient time to receive and review recommendations before its completion," Vaishnaw said.

What's the demand of central govt employees?

Trade unions had pressed for the formation of the 8th Pay Commission earlier this month during their pre-budget consultation with Finance Minister Nirmala Sitharaman.

They had also sought increasing the minimum pension under the Employees' Provident Fund Organisation (EPFO) scheme to ₹5,000 from the current ₹1,000, raising the income tax exemption limit to ₹10 lakh, and restoring the old pension scheme (OPS) for government employees.

The implementation of Pay Commission recommendations usually has a ripple effect on the economy. A higher disposable in the hands of central government employees and pensioners leads to greater consumer spending, spurring economic growth. However, it also puts pressure on the government exchequer.