8th Pay Commission: Central Govt Employee's May Have To Wait A Little Longer For Formation Of Pay Panel; Check Why

After the cabinet nod on the setting up of the 8th Pay Commission to revise salaries of nearly 50 lakh central government employees and allowances of 65 lakh pensioners, all eyes are glued to the formation of the pay panel.

However, recently a Moneycontrol report, quoting Expenditure Secretary Manoj Govil has said expenses related to the 8th Pay Commission were not accounted for in the Union Budget for 2025-26.

The report added that the finance ministry has sought suggestions from the Ministry of Defence, Ministry of Home Affairs, and the Department of Personnel and Training 8th Pay Commission’s terms of reference, since the approval of the same is a pre-before the commission begins its work.

Union Finance Minister Nirmala Sitharaman did not mention any details related to 8th Pay Commission in the Budget 2025, which is indicative that the new pay panel’s recommendations might not kick in the next financial year i.e From January 1, 2026.

Manoj Govil, however in an interview to TOI said that setting up the 8th Pay Commission might occur in two months, perhaps by April. The draft terms of reference have been sent to the ministries of defense, home affairs, and DoPT for their opinions. The TOR will be framed after their opinions and recommendations are received, and the Cabinet's approval would then be requested, he added.

He clarified the timing when asked about the economic ramifications of the 8th Pay Commission in light of the implementation of the core wage hike. He told TOI that the pay commission will not have any financial effects in the upcoming fiscal year, 2025–2026.

The pay commission will take some time to submit its report after it is set up, and the government would then need to process it. Therefore, an outgo is not expected in the upcoming fiscal year. He said the outgo will be present in the fiscal year beginning in April 2026, Govil told TOI.

Media reports say that the salary calculation formula for the 8th Pay Commission will be akin to the pay calculation it was based for 7th Pay Commission. The Aykroyd formula was the base for deciding salaries of government employees in the 7th Pay Commission. The formula is based on recommendations of Wallace Ruddell Aykroyd — a well known nutritionist and first director of the Department of Nutrition at FAO (Food and Agricultural Organisation) — whose recommendations were based on the food and clothing requirements of the people of a country. The formula gauges wages or payout of employees based on the family's nutritional requirement.