The Union Cabinet has approved the formation of the 8th Central Pay Commission, paving the way for a major salary and pension hike for millions of central government employees and retirees. The commission’s recommendations are expected to come into effect from January 1, 2026, replacing the current 7th Pay Commission framework.
8th Pay Commission Approved, Big Salary Hike Likely for Government Employees and Pensioners
According to government estimates, the move will benefit nearly 1 crore people — including around 50 lakh serving employees and 65 lakh pensioners from the central government, defence forces, and the Delhi government.
While the panel’s members and Terms of Reference are yet to be announced, expectations are high. Sources suggest that the fitment factor, which determines the salary revision, could be increased from 2.57 under the 7th Pay Commission to between 2.6 and 2.86. This could push the current minimum basic pay from ₹18,000 to between ₹41,000 and ₹51,480.
Pensioners could see their retirement benefits rise by up to 30%
Allowances such as Dearness Allowance (DA), House Rent Allowance (HRA), and Travel Allowance (TA) will also be revised in line with the new pay structure. Pensioners could see their retirement benefits rise by up to 30%.
Economists estimate that the implementation of the new pay structure could inject ₹3 to ₹3.15 lakh crore into the economy, boosting consumer spending and benefiting sectors like FMCG, retail, real estate, and automobiles. However, experts also warn that the move may put pressure on the government’s fiscal deficit and inflation levels.
The last pay revision — under the 7th Pay Commission — was implemented in 2016. If timelines are met, the 8th Pay Commission will mark a decade since the last major overhaul in central government pay and pensions.
