Cabinet approves ToR of 8th pay commission, to benefit 50 lakh employees and 69 lakh pensioners

NEW DELHI: The Cabinet on Tuesday approved the terms of reference of the 8th Pay Commission, which will benefit 50 lakh central government employees and 69 lakh pensioners and will have implications on the emoluments of the staff of state governments. The recommendations of the Commission, to be headed by former Supreme Court judge Ranjana Prakash Desi, are likely to be effective from January 1, 2026.

The commission will submit its report in 18 months and interim reports as and when they are finalised. The announcement comes ahead of Bihar state elections, which will be held between November 6 and 11. According to an official statement, the commission will look into "the prevailing emolument structure, benefits and working conditions available to employees of Central Public Sector Undertakings and private sector" while finalising its recommendations.

While making its recommendations, the commission will also consider the economic conditions in the country and the need for fiscal prudence, and the need to ensure that adequate resources are available for developmental expenditure and welfare measures. It would also take into account the unfunded cost of non-contributory pension schemes; and the likely impact of the recommendations on the finances of the state Governments which usually adopt the recommendations with some modifications, the statement said.

Panel to review pay structure

"The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the Terms of Reference of 8th Central Pay Commission," Information & Broadcasting Minister Ashwini Vaishnaw told reporters. The commission will examine and recommend changes in salaries and other benefits of central government employees.

The commission's recommendations will cover nearly 50 lakh central government employees, including defence services personnel, and 69 lakh pensioners. The ToR of the commission was approved by the Cabinet about nine months after it gave an in-principle nod to setting up the 8th Pay Commission . The ToR has been finalised after consultation with various ministries, state governments and staff side of joint consultative machinery.

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Report expected before 2026 rollout

The Pay Commission, under Desai, will have one part-time member -- IIM (Bangalore) Professor Pulak Ghosh, while Petroleum Secretary Pankaj Jain will be the Member Secretary. Desai is the chairman of the Press Council of India. She has headed major government panels in the past, including the Delimitation Commission for the Union Territory of Jammu and Kashmir, and the expert committee on drafting of Uttarakhand's Uniform Civil Code (UCC).

This will be her fourth major assignment after retiring as a Supreme Court judge. On the date of implementation of the pay panel award, Vaishnaw said, "The specific date will be decided once the interim report comes in... But mostly it should be January 1, 2026." Usually, recommendations of the pay commissions are implemented after a gap of every 10 years. Going by this trend, the effect of the 8th Central Pay Commission recommendations would normally be expected from January 1, 2026, the government said in a statement.

The 7th Pay Commission was constituted in February 2014. Its recommendations were implemented from January 1, 2016. To compensate central government employees for erosion in the real value of their salaries on account of inflation, dearness allowance (DA) is paid to them, and the rate of DA is revised periodically every six months on the basis of the rate of inflation.