8th Pay Commission: After offering citizens a Diwali bonanza through GST rate cuts, the Modi government may be preparing another big announcement for central employees — the formation of the 8th Pay Commission board. Speculation is rife that the move could be made before the schedule for the Bihar Assembly elections is declared.
According to officials, the government is expected to appoint the commission’s chairman and members, which would mark the beginning of its formal functioning. Experts suggest this could be the Centre’s next major political move after GST reforms, aimed at sending a strong signal to employees and pensioners across the country.
Delay in Terms of Reference
The 8th Pay Commission was announced in January 2025, but so far, the Terms of Reference (ToR) have not been finalised, nor have its members been appointed. A report by Kotak Institutional Equities notes that the process of drafting and implementing recommendations typically takes 18–24 months. For instance, the 7th Pay Commission took 27 months from its notification to implementation. This indicates that the impact of the 8th Pay Commission may not be visible before late 2026 or early 2027.
Signal to Employees
Employee bodies are pressing for quick action. RK Verma, General Secretary of the Joint Employees Council, said that even if the government only announces the board or issues a notification, it would send a positive signal to millions of central government employees and pensioners.
Fiscal Burden a Challenge
Financial experts warn that the biggest challenge for the government will be managing the fiscal implications. The implementation of the 8th Pay Commission is estimated to cost the exchequer an additional ₹2.4 to 3.2 lakh crore, which is about 0.6–0.8% of India’s GDP. While this could strain fiscal balance, experts believe that it may also lead to a spike in consumption, liquidity, and market activity, giving the government a temporary economic and political boost.
Early Consultations Underway
The Finance Ministry has already initiated preliminary consultations with key ministries, including Defence, Home, and Personnel. Minister of State Pankaj Chaudhary confirmed in Parliament that discussions are underway. The crucial question now is whether the Centre will fast-track the formation of the commission as part of its Bihar election strategy or stick to the conventional timeline.
With the festive season underway and elections looming, all eyes are on the Modi government’s next move — one that could impact not only the nation’s workforce and pensioners but also the political narrative in the run-up to Bihar polls.
