8th Pay Commission Approved: How Will Government Employees' New Salaries Be Decided?

The Central Government has finally given its approval to the Terms of Reference (ToR) for the 8th Pay Commission, marking a major step toward revising the pay structure of millions of central government employees and pensioners. Along with this, the government has appointed Justice Ranjan Desai, a former Supreme Court judge, as the Chairperson of the 8th Central Pay Commission.

This development has brought renewed hope among government employees who have been waiting eagerly for updates on the upcoming salary revision. But the key question remains — how will salaries be decided under the 8th Pay Commission, and what factors will influence the new pay structure? Let’s understand in detail.

What is the 8th Pay Commission?

The Central Pay Commission (CPC) is a body set up by the Government of India periodically to review and recommend changes in the pay scales, allowances, and pensions of central government employees. The 8th Pay Commission will succeed the 7th Pay Commission, which was implemented in 2016.

Typically, each commission studies various aspects of government employment, cost of living, inflation, and fiscal conditions before proposing a new pay matrix that determines salaries for different levels of employees.

Who Will Head the Commission?

The government has appointed Justice Ranjan Desai, former judge of the Supreme Court, as the Chairperson of the 8th Pay Commission. The commission will also include senior economists, finance experts, and administrative officers who will evaluate salary structures and economic feasibility.

What Will the 8th Pay Commission Do?

The Terms of Reference (ToR) approved by the central government outline the primary responsibilities of the 8th Pay Commission, which include:

• Reviewing the current pay matrix introduced by the 7th Pay Commission.

• Recommending a revised structure of pay, allowances, and pensions for central government employees and pensioners.

• Considering the impact of inflation, economic growth, and fiscal balance while formulating salary recommendations.

• Suggesting ways to maintain parity between employees of the central and state governments where feasible.

• Examining issues related to gratuity, leave encashment, and post-retirement benefits.

How Will the Salary Be Decided?

The salary structure under the 8th Pay Commission will be determined based on multiple key factors:

Fitment Factor:
This multiplier is used to calculate the new basic pay from the existing one. For instance, under the 7th Pay Commission, the fitment factor was 2.57. Experts expect this to rise to around 3.00 or higher in the 8th Pay Commission, which would significantly increase basic pay.

Cost of Living and Inflation:
The commission will assess the rise in the cost of living since 2016 and adjust salaries to maintain real purchasing power.

Dearness Allowance (DA) Merger:
It is likely that the existing DA will be merged with the basic salary before the new pay structure is finalized. This ensures uniformity and simplifies future DA revisions.

Economic Feasibility:
The government’s ability to bear the financial burden of revised salaries and pensions will play a major role in the final recommendations.

Pay Parity and Workload Evaluation:
The commission will also review pay parity among various departments and levels to ensure fairness and efficiency.

When Will the Recommendations Be Implemented?

Although the 8th Pay Commission has been officially approved, the entire process — from study to recommendation to implementation — is expected to take time. Typically, a Pay Commission takes 2 to 3 years to submit its final report. If the timeline follows the usual pattern, the implementation could happen by 2026, coinciding with the next general revision cycle.

What Does This Mean for Employees?

The 8th Pay Commission’s formation has come as a major relief for nearly 50 lakh central government employees and 68 lakh pensioners. A higher fitment factor could result in a 25–35% rise in basic salary, apart from adjustments in allowances and pension benefits.

This move is also expected to have a positive impact on consumer spending, as increased salaries could lead to higher demand in the market — indirectly boosting the economy.

Final Thoughts

The approval of the 8th Pay Commission signals the government’s intent to review and improve the financial well-being of its employees. While exact salary details will emerge only after the commission’s report, early indications suggest a substantial hike in pay and pension benefits.

For now, government employees can look forward to the upcoming recommendations that will shape the next decade of their financial security and professional stability.