Around 50 lakh central government employees and 65 lakh pensioners who were hoping for a major hike in basic pay might be in for a disappointment. A new analysis by Kotak Institutional Equities has thrown cold water on the widespread expectation that the minimum basic salary would triple under the 8th Pay Commission. (News18 Hindi)
So far, the assumption was that the current base pay of Rs 18,000 would jump to Rs 51,000, a 183% increase. But the latest projections suggest a far more modest jump, pegging the new basic salary at just Rs 30,000. (News18 Hindi)
The key figure here is the fitment factor, the multiplier used to convert current salaries to the revised pay structure. While the 7th Pay Commission used a factor of 2.57, the 8th Pay Commission is now expected to apply a more conservative multiplier of 1.8. That would lift the base salary from Rs 18,000 to Rs 30,000, not the Rs 51,000 many employees were hoping for. Employees may be shocked by this new possibility, the report states bluntly. (News18 Hindi)
Even this limited increase won’t happen anytime soon. Though the 8th Pay Commission was formally announced in January 2025, the Terms of Reference (ToR) haven’t been finalised, nor have commission members been appointed. According to Kotak’s timeline, the commission’s report will take 18 months, followed by another 3 to 9 months for government approval and implementation. That means employees shouldn’t expect any salary revision before late 2026 or early 2027. (News18 Hindi)
Despite the restrained hike, implementing the 8th Pay Commission is expected to cost the exchequer between Rs 2.4 lakh crore to Rs 3.2 lakh crore, which is 0.6% to 0.8% of GDP, according to the report. The lion’s share of this benefit will go to Grade C employees, who make up 90% of the central government workforce. (News18 Hindi)
Historically, pay commission hikes have boosted sectors like automobiles, consumer goods, and real estate. This time too, a similar trend is expected. Kotak projects that the revised salaries could drive additional savings of Rs 1 to Rs 1.5 lakh crore, with increased investments in stock markets, bank deposits, and physical assets. (News18 Hindi)
On July 21, 2025, Minister of State for Finance Pankaj Chaudhary confirmed in Parliament that the groundwork for the 8th Pay Commission has begun. He said the ministry has already sought inputs from key departments including Defence, Home Affairs, Personnel, and various states. (News18 Hindi)
The Centre typically sets up a new pay commission every decade to adjust public sector salaries and pensions in line with inflation and rising costs. The 7th Pay Commission came into effect in 2016. The 8th will likely land right on cue, but with far more tempered expectations. (News18 Hindi)