The central government has finally made some concrete progress on the 8th Central Pay Commission over the past few days. The Modi government has finally notified the 8th Pay Commission, paving the way for the three-member panel led by Justice Ranjana Desai to begin work.
The notification issued by the Ministry of Finance on November 3, provides a complete description of the Commission’s structure and Terms of Reference (ToR).
The ToR makes it clear that the Commission will not only be limited to salary and pension revisions for government employees, but will also review several other monetary benefits, such as allowances, bonuses, gratuity, and performance-linked incentives. As with previous commissions, this panel will also recommend extensive salary reforms and significant changes to benefits.
Structure of the 8th Pay Commission
The government stated in the notification that Justice Desai will be the chairperson of the 8th Pay Commission. Prof. Pulak Ghosh has been appointed as a part-time member and Pankaj Jain as the member secretary.
The Commission will be headquartered in New Delhi and will submit its recommendations to the government within 18 months. The Commission may also submit an interim report if necessary.
Which employees will benefit?
According to the notification, the Commission will review the salaries and benefits of the following categories of employees:
-Industrial and non-industrial employees of the Central Government
-Officers of the All India Services
-Employees of the Armed Forces
-Employees of Union Territories
-Employees of the Indian Audit and Accounts Department
-Members of regulatory bodies established by Parliament (except the RBI)
-Officers and employees of the Supreme Court and High Courts (under UTs)
-Judicial officers under Union Territories
Not just salaries, allowances and bonuses will also be reviewed
The Commission’s scope is much broader. According to the notification, the Commission will work on the following points:
- Salaries, allowances, and other benefits:
The Commission will recommend necessary and feasible changes in salaries, allowances, and other cash or in-kind benefits. Its objective will be to make government jobs attractive to talented youth and promote efficiency and accountability in the work culture.
- Bonus and Performance-Linked Incentive Scheme (PLI):
The Commission will review existing bonus schemes and may recommend new performance-based incentive models to reward outstanding employees.
- Restructuring of Allowances:
Considering the terms and number of various allowances currently offered, the Commission will review their rationality and may recommend restructuring them.
- Gratuity and Pension:
The Death-cum-Retirement Gratuity (DCRG) for employees covered under the NPS (National Pension System) and Unified Pension Scheme (UPS) will be reviewed.
In addition, improvements to gratuity and pension will be recommended for employees not covered by the NPS.
Economic situation and impact on states will also be considered
The 8th Pay Commission has also been directed to consider the country’s economic situation, fiscal prudence, and the financial situation of the states when making its recommendations.
The Commission will also be required to examine the salaries and benefits offered to employees in central government public sector undertakings (PSUs) and the private sector to provide comparative and practical recommendations.
Commission has the freedom and authority to seek expert assistance
The government has granted the Commission the freedom to determine its own procedures and to appoint advisors, experts, and institutional consultants as needed. Ministries and departments have been directed to provide the Commission with all necessary information and support.
Report in 18 months, major decision may be forthcoming
According to the notification, the Commission will be required to submit its report within 18 months. That is, if the Commission begins work in November 2025, its recommendations are likely to reach the government by May 2027.
There is also a possibility that the Commission may issue an interim report on some matters, so that employees can receive initial relief soon.
Summing up…
The formation of the 8th Pay Commission is a major relief for government employees. Not only salary revisions, but also a review of several aspects such as allowances, bonuses, and gratuity are expected to lead to an overall improvement in the income structure of employees.
The government has also indicated that the Commission will work towards strengthening the accountability and performance-based pay system, meaning that in the future, government jobs may become more modern, transparent, and results-oriented.
