8th Pay Commission salary hike: What Budget 2026 holds for central government employees

Finance Minister Nirmala Sitharaman will present the Union Budget 2026 on Sunday, February 1, 2026. In the lead-up to the Union Budgets, most of the expectations of salaried taxpayers revolve around tax slabs and reliefs. This year, a particular section of the salaried taxpayers in government jobs, especially central government employees, will closely follow the Budget proceedings for any announcements related to the 8th Pay Commission salary hikes and related provisions. But should they expect anything from the Budget? This article aims to answer that question.

Any specific announcement related to the 8th Pay Commission salary hike is highly unlikely in the Budget speech. This is because the 8th CPC was recently set up to decide matters related to salary revisions. Such issues are not addressed through the Budget.

Higher expenditure in FY2028

According to ICRA, a higher expenditure on account of the 8th CPC recommendations may take place in FY 2028. For the upcoming financial year (FY2027), the government may use the time to boost capital expenditure.

ICRA believes that the government is likely to boost capex in FY2027 before fiscal rigidities, in the form of increased committed expenditure, set in from FY2028 on account of the 8th Pay Commission.

It says that in Budget 2026, the government may push up capital expenditure by ~14% (to ₹13.1 trillion), before fiscal rigidities in the form of higher committed expenditure set in from FY2028 on account of the 8th CPC recommendations. "The GoI is likely to boost capex, before fiscal rigidities in the form of higher committed expenditure burden set in from FY2028 on account of the 8th CPC."

"Given that the delayed implementation of the 8th CPC would lead to sizeable arrears, the fiscal impact of the same on the FY2028 Budget would be quite large, with a 40-50% expansion in the expenditure on salaries. This would constrain the fiscal space for discretionary expenditure, including capex, in FY2028, and perhaps, in FY2029," ICRA said.