Corporate Comfort vs. Employee Apathy: The Crisis of Governance Priorities in India

As India enters the second half of 2025 under the third term of the Modi-led government, a pressing concern continues to fester quietly beneath the surface of electoral triumphs and celebratory development narratives: the systemic neglect of central government employees and pensioners.

Despite repeated assurances and symbolic gestures, the unresolved issues of the 8th Pay Commission, outdated employee insurance schemes, and the long-pending 18-month arrears of Dearness Allowance (DA) and Dearness Relief (DR) suggest a stark disconnect between government rhetoric and ground realities. What amplifies the frustration is the evident contradiction in the government’s economic posture—where corporate tax incentives, financial bailouts, and international fiscal engagements move swiftly, employee welfare schemes face stagnation, delay, and in some cases, outright denial. This contrast is no longer merely administrative; it speaks volumes about the policy priorities of a government increasingly perceived to favor boardrooms over classrooms, tax breaks over payslips.

The 8th Pay Commission, a landmark initiative expected to revise salaries and pensions for nearly 1.1 crore central government employees and pensioners, was approved in principle in January 2025. Yet six months into the year, there is little movement on the ground. No official Terms of Reference (ToR) have been published, and the appointment of commission members remains pending. This inertia is unprecedented when compared to previous pay commissions, which were typically constituted at least 18–24 months ahead of implementation. With the deadline for implementation set for January 1, 2026, the lack of progress all but ensures a delay—potentially pushing wage revisions to 2027 or beyond. This delay, amid rising inflation and surging cost of living, has severely dented morale among employees, who are already contending with stagnant salaries that no longer reflect economic realities.

The likely fitment factor—the formula used to calculate salary hikes—is estimated to fall between 2.5 and 2.86 times the existing basic pay. This could raise the minimum basic salary from the current ₹18,000 to around ₹46,000–₹51,480. But such projections mean little when no formal framework exists to implement them. The government’s sluggish approach in this regard not only disrupts financial planning for lakhs of families but also raises fundamental questions about its administrative intent and capacity.

Adding to the atmosphere of uncertainty is the pending overhaul of the Central Government Employees Group Insurance Scheme (CGEGIS). The scheme, last revised in 1988, is grossly outdated—especially its use of mortality rates and contribution slabs. The Department of Expenditure has reportedly been working on a revised proposal, yet the government has failed to provide concrete timelines for its rollout. In an era where inflation has reshaped the value of insurance and financial security, employees continue to contribute based on antiquated tables while receiving benefits that fall dramatically short of modern needs. This negligence is not merely procedural—it undermines the very notion of social security that the public sector was once proud to offer.

Most damning, however, is the unresolved issue of the 18-month DA/DR arrears that were frozen during the COVID-19 pandemic—from January 2020 to June 2021. These arrears were withheld as part of the government’s fiscal containment measures during an unprecedented global crisis. Yet even as the economy recovered, tax revenues climbed, and corporate earnings soared, these dues were never restored. Despite numerous representations by employee federations and pensioner associations, the government continues to cite fiscal pressure and pandemic-related expenditure as reasons for its refusal to compensate. The irony is inescapable: during the same period, corporate tax rates were slashed from 30% to 22%, and a series of Production-Linked Incentive (PLI) schemes amounting to over ₹2 lakh crore were rolled out to bolster private sector manufacturing.

The juxtaposition is striking. On one hand, corporate houses received swift and decisive policy support—tax rebates, structural incentives, and access to low-cost capital. On the other, public servants who kept the country’s essential services running during the pandemic, often at great personal risk, are still waiting for what was rightfully theirs. This imbalance points to an alarming shift in governance ethos—one where fiscal policy is increasingly tailored for market optics and investor confidence, rather than equity and public sector commitment.

International financial decisions further expose this imbalance. India has taken an assertive stance on global platforms, securing IMF support for various geopolitical initiatives and participating in global climate financing arrangements. Yet, domestically, its own workforce—responsible for policy execution, service delivery, and institutional continuity—finds itself ignored. Such policy dichotomies do not go unnoticed. They breed cynicism, erode institutional trust, and fuel resentment among a workforce that once formed the backbone of Indian governance.

What is at stake is not merely a set of delayed payments or outdated policies—it is the government’s credibility and moral authority. It is difficult to reconcile the vision of a $5 trillion economy with the reality of disgruntled employees forced to rely on court interventions and protest campaigns to secure their basic dues. The public sector in India has long been an engine of both social mobility and governance stability. Undermining it through apathy and neglect could have far-reaching consequences—including talent attrition, diminished productivity, and eventually, systemic breakdowns in service delivery.

The road ahead demands immediate and unapologetic course correction. The government must expedite the constitution of the 8th Pay Commission, publish its Terms of Reference without further delay, and commit publicly to implementing its recommendations on time. The CGEGIS must be updated with actuarially accurate mortality rates and contribution structures that reflect present-day realities. Most importantly, the 18-month DA/DR arrears must be cleared in full. This is not a populist demand—it is a contractual and ethical obligation that must be honored.

Governments are remembered not only for the elections they win but also for how they treat their people in times of crisis and calm alike. While the corporate sector may be essential for economic momentum, it is the public sector that upholds the institutional and administrative framework of the nation. Elevating one at the expense of the other is not just poor policy—it is a betrayal of the social contract. For a government that prides itself on decisive governance, the time to act on employee welfare is not tomorrow or the next fiscal cycle—it is now.