8th Pay Commission: As the 8th Pay Commission has begun working for the wage revision of central government employees and pensioners, there are speculations that it may exert higher pressure on India’s
government fiscal front. Member of the Prime Minister’s Economic Advisory Council (EAC-PM) Neelkanth Mishra earlier said that the rollout of the 8th Pay Panel in Fy28 will increase the combined payout for the Centre and states to Rs 4 lakh crore.
Mishra added that arrears of five quarters would take the overall burden to Rs 9 lakh crore.
“The government may also keep in mind that in FY28 there will be the Pay Commission. And the Pay Commission at the general government level will be Rs 4 lakh crore plus; there will be five quarters of arrears, so that’s like a Rs 9 lakh crore burden,” Mishra said.
Mishra underlined the debt-to-GDP target, saying it is a tricky task with a lot of heavy lifting will be required.
Mishra cautioned that India may not be in a position to adopt a very aggressive fiscal consolidation path, given the combined rollout of the pay commission in FY28. He also highlighted that India has been an outlier in fiscal consolidation due to multi-year low inflation.
From FY27, Mishra added, India will transition to a five-year debt-GDP fiscal roadmap.
8th Pay Commission Implementation Timeline
There’s a likelihood possibility that the commission will submit the report not before mid-2027. The Cabinet then will go through recommendations and decide on approval. However, new recommendations will be effective retrospectively from January 1, 2026. This means central government employees and pensioners will receive their increased salary and benefits only after the approval, but the arrears will be counted from January 1, 2026.
Govt Denies Proposal To Merge DA, DR With Basic Pay
Union Minister of State for Finance Pankaj Chaudhary on Monday said the central government has notified the constitution of the 8th Central Pay Commission, and there is no proposal as of now to merge the existing dearness allowance (DA) or dearness relief (DR) with the basic pay.
“No proposal regarding merger of the existing dearness allowance with the basic pay is under consideration with the government at present. In order to adjust the cost of living and to protect basic pay/ pension from erosion in real value on account of inflation, the rates of DA/ DR are revised periodically every six months on the basis of the All India Consumer Price Index for Industrial Workers (AICPI-IW) released by Labour Bureau, Ministry of Labour and Employment,” Chaudhary said in response to a query in the Lok Sabha.
Currently, both DA and DR stand at 55% of the basic pay or pension, respectively. Last month, the government had hiked the DA/ DR by 3% to 55% ahead of Diwali.
