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As the expected implementation date of the 8th Pay Commission draws closer, Indian Railways is preparing for the financial impact by tightening expenditure across key areas. The commission, though yet to submit its report, is widely expected to have its recommendations implemented retrospectively from January 1, 2026, once finalised.
According to a Times of India report, Indian Railways has begun cost-cutting measures across maintenance, procurement, and energy usage to cushion the anticipated rise in salaries and pensions for serving and retired employees after the 8th Pay Commission takes effect. The pay panel, constituted every 10 years, was finally set up by the central government in October this year, following delays, with the notification of its Terms of reference to review wages and allowances for employees and pensioners.
The financial constraints are evident in the Railways’ operating metrics. As per a TOI report, Indian Railways recorded an operating ratio (OR) of 98.90 per cent in 2024–25, resulting in a net revenue of Rs 1,341.31 crore. For 2025–26, the Railways has projected an OR of 98.42 per cent, with estimated net revenue of Rs 3,041.31 crore, reflecting sustained pressure on margins despite higher revenues.
The report also quoted officials as saying that the Railways plans to reduce its dependence on borrowing, as annual payments to the Indian Railway Finance Corporation (IRFC) are expected to decline from 2027-28. This is attributed to recent capital expenditure being funded through gross budgetary support (GBS).
In a recent update, Minister of State for Finance Pankaj Chaudhary said that decisions regarding the timing and funding of the 8th Pay Commission would be taken at a later stage.
Responding to a Lok Sabha query on December 8, 2025, on whether the government plans to implement the commission from January 1, 2026, he said, “The 8th Central Pay Commission (CPC) has already been constituted. The Terms of Reference (ToR) of the 8th Central Pay Commission have been notified vide Ministry of Finance’ Resolution dated 03.11.2025. The number of Central Government employees is 50.14lakh and the number of pensioners is 69 lakh approximately. The date of implementation of the 8th Central Pay Commission shall be decided by the government. Government will make appropriate provision of funds for implementing the accepted recommendations of 8th CPC.”
He further added that the commission would determine its own methodology for preparing recommendations.
“As specified in the Resolution notified on November 3, 2025, the 8th Central Pay Commission will make its recommendations within 18 months from the date of its constitution,” the MoS Finance said.
According to a Times of India report, Indian Railways has begun cost-cutting measures across maintenance, procurement, and energy usage to cushion the anticipated rise in salaries and pensions for serving and retired employees after the 8th Pay Commission takes effect. The pay panel, constituted every 10 years, was finally set up by the central government in October this year, following delays, with the notification of its Terms of reference to review wages and allowances for employees and pensioners.
Railway finances under pressure
The financial constraints are evident in the Railways’ operating metrics. As per a TOI report, Indian Railways recorded an operating ratio (OR) of 98.90 per cent in 2024–25, resulting in a net revenue of Rs 1,341.31 crore. For 2025–26, the Railways has projected an OR of 98.42 per cent, with estimated net revenue of Rs 3,041.31 crore, reflecting sustained pressure on margins despite higher revenues.
The report also quoted officials as saying that the Railways plans to reduce its dependence on borrowing, as annual payments to the Indian Railway Finance Corporation (IRFC) are expected to decline from 2027-28. This is attributed to recent capital expenditure being funded through gross budgetary support (GBS).
Government response on implementation timeline
In a recent update, Minister of State for Finance Pankaj Chaudhary said that decisions regarding the timing and funding of the 8th Pay Commission would be taken at a later stage.
Responding to a Lok Sabha query on December 8, 2025, on whether the government plans to implement the commission from January 1, 2026, he said, “The 8th Central Pay Commission (CPC) has already been constituted. The Terms of Reference (ToR) of the 8th Central Pay Commission have been notified vide Ministry of Finance’ Resolution dated 03.11.2025. The number of Central Government employees is 50.14lakh and the number of pensioners is 69 lakh approximately. The date of implementation of the 8th Central Pay Commission shall be decided by the government. Government will make appropriate provision of funds for implementing the accepted recommendations of 8th CPC.”
He further added that the commission would determine its own methodology for preparing recommendations.
“As specified in the Resolution notified on November 3, 2025, the 8th Central Pay Commission will make its recommendations within 18 months from the date of its constitution,” the MoS Finance said.
