8th Pay Commission News: Over 1.2 crore central government employees and pensioners are eagerly waiting for the Centre to set up the panel and finalise the Terms of Reference (ToR), which will have specific guidelines and objectives to review and recommend salary and pension for government staff.

Earlier, it was expected that the next pay panel would start its term from 1st January 2026, but now this seems impossible as there has not been much progress so far concerning ToR finalisation and the appointment of key members. According to a recent report by brokerage Ambit Capital, central government employees and pensioners can expect up to 34% hike in their salary under the 8th Pay Commission. The report also said that once the commission’s recommendations are implemented, they will not only increase the income of government employees, but will also give a tremendous boost to consumer spending in the country.

The brokerage report clearly states that: “The 7th Pay Commission (January 2016 – December 2025) had implemented a modest salary hike of 14% (lowest since 1970). We expect the 8th Pay Commission to announce a hike of 30-34% for salaries and pensions to cover 11 mn beneficiaries to boost consumption.”

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What will be the fitment factor under the 8th Pay Commission?

Ambit Capital’s report states that the fitment factor in the 8th Pay Commission can be between 1.83 to 2.46. That is, the new salary will be fixed by increasing the existing basic salary of the employees by this multiplier.

For example, in the 7th Pay Commission this factor was kept at 2.57, due to which the minimum basic salary was increased from Rs 7,000 to Rs 18,000. However, after resetting the dearness allowance (DA), the actual increase was only 14.3%.

When can new pay commission recommendations be implemented?

The government may have announced the 8th Pay Commission, but till now its Terms of Reference (ToR), chairman and members have not been appointed. In such a situation, doubts are deepening on the possibility of its implementation from January 2026.

Ambit’s report also states that the 7th Pay Commission took 18-24 months to be implemented. Therefore, if there is further delay in the process, then this commission can be implemented in FY27 (financial year 2026-27).

What will pensioners get?

According to Ambit’s report, pensioners will also get an increase in basic and dearness allowance (DA). However, they are not eligible for HRA or other allowances, so they will get slightly less benefit on a percentage basis.

The report states that 50% of the last-drawn salary (as base pay) has now been guaranteed from FY26 under the Unified Pension Scheme (UPS). This new pension scheme UPS has been implemented from April 2025 and has become an alternative to the National Pension Scheme (NPS).

Also read: Central govt rolls out more incentives to UPS subscribers

How much will be the burden on the government on account of 8th Pay Commission?

Ambit Capital estimates that this increase of 30-34% in salary and pension will put an additional burden of Rs 1.3 to Rs 1.8 lakh crore on the government. Its direct impact can be seen on GDP up to 30-50 basis points.

The report also estimates that this will increase consumer spending in the country rapidly and due to this the FMCG, BFSI, retail and automobile sectors will benefit significantly.

Why is Pay Commission necessary?

A new pay commission is constituted every 10 years to keep the salaries of government employees in line with the private sector and to retain talented personnel in government service.

Ambit’s report says that this commission will not only upgrade the salary structure but will also accelerate the economic activities of the country.

Key points from the report:

-8th Pay Commission estimated to give a possible salary and pension hike of 30-34%

-Fitment factor likely to be between 1.83–2.46

-Doubt over implementation from January 2026, may be delayed till FY27

-1.12 crore employees and pensioners will get benefit

-Financial burden of Rs 1.3–Rs 1.8 lakh crore on the government

Now all eyes are on the next official announcement of the central government and the outline of the commission. If the process is expedited, then over a crore employees and pensioners can soon get a big relief in the form of revised salary and pension.