Centre approves Terms of Reference for 8th Pay Commission to revise salaries of 50 lakh employees
Commission to take effect from January 1, 2026; pay hike likely between ₹14,000 and ₹19,000 per month, say reports.
In a major relief for nearly 50 lakh central government employees and 69 lakh pensioners, the Union Cabinet has approved the Terms of Reference (ToR) for the 8th Central Pay Commission, paving the way for a comprehensive revision of salaries, allowances, and pensions for government staff.
Announcing the decision, Union Minister Ashwini Vaishnaw said the ToR had been finalised after consultations with various ministries, state governments, and representatives of the Joint Consultative Machinery (JCM). The move officially sets in motion the process of formulating the next pay structure for central government employees.
The 8th Pay Commission, which will succeed the 7th Pay Commission implemented in January 2016, is expected to come into effect from January 1, 2026. The new pay scales will determine the revised structure of basic pay, dearness allowance, house rent allowance, and other benefits for central employees.
Expected Salary Revision
According to a report by Goldman Sachs, the pay revision could result in a monthly salary hike of ₹14,000 to ₹19,000 for central government employees once the 8th Pay Commission’s recommendations are implemented. The report estimates that around 50 lakh employees and 65 lakh pensioners will benefit directly from the changes.
If the government allocates around ₹1.75 lakh crore for the commission’s implementation — with half earmarked for salary adjustments and the other half for pensions — the median monthly salary could rise to approximately ₹1,14,600, the report noted.
Background and Timeline
The 7th Central Pay Commission was constituted in February 2014 under the chairmanship of Justice A.K. Mathur, and its recommendations were implemented with effect from January 1, 2016. Following a similar timeline, the 8th Pay Commission is expected to submit its report by late 2025, allowing for implementation at the start of 2026.
Broader Economic Impact
Experts believe that the salary revision will not only boost disposable income for government employees but also stimulate consumer demand and support economic growth. The pay hike, however, will add to the government’s fiscal expenditure, requiring careful budget management to maintain deficit targets.
The approval of the ToR marks a crucial administrative step in ensuring timely wage adjustments and social security measures for millions of central employees and retirees, reaffirming the government’s commitment to their welfare and financial stability.