Union cabinet approves establishment of 8th Pay Commission to revise salaries and pensions

The Union Cabinet approved the establishment of the 8th Pay Commission on Jan 16 to update the salaries of central government employees and pension benefits for retirees.

Union Minister of Information and Broadcasting Ashwini Vaishnaw said that Prime Minister Narendra Modi presided over the Cabinet meeting where this decision was made.

The minister also announced that the chairman and two members of the Commission would be appointed shortly.

Vaishnaw added that consultations would be held with both central and state governments, along with other stakeholders.

Prime Minister Narendra Modi expressed that the formation of the 8th Pay Commission would boost consumption and improve the quality of life.

“We are all proud of the efforts of government employees, who work towards building a 'Viksit Bharat'. The Cabinet's decision regarding the 8th Pay Commission will enhance the quality of life and stimulate consumption,” he wrote on X.

The central government appoints a pay commission every 10 years to update the pay scales for its employees.

Each commission is given a terms of reference (ToR), outlining its purpose, including the revision of the pay structure. Pay commissions also sometimes determine pension payments.

Currently, around 65 lakh people are pensioners, and more than 49 lakh work for the central government.

The 7th Pay Commission, which was established in 2016, will conclude its tenure in 2026.

According to the 7th Pay Commission, all personnel in the central government’s civil services who are paid from the Consolidated Fund of India are considered central government employees.

However, the 7th Pay Commission does not cover Gramin Dak Sevaks or employees of public sector enterprises (PSUs) or autonomous entities, meaning workers in organizations like Coal India are excluded.

PSU staff members have varying pay packages depending on the projects they work on.

Despite employee unions' demands for a 3.68 fitment factor, the government chose a fitment ratio of 2.57 for the 7th Pay Commission's compensation review.

The fitment factor is one multiplier used to determine salaries and pensions.

As a result, the minimum basic salary increased from ₹7,000 per month under the 6th Pay Commission to ₹18,000 per month.

Additionally, the minimum pension increased from ₹3,500 to ₹9,000, while the maximum pension rose to ₹1,25,000 and the maximum salary reached ₹2,50,000.