Cabinet Approves Terms of Reference for 8th Pay Commission, Recommendations Expected in 18 Months

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Monday approved the Terms of Reference (ToR) for the 8th Central Pay Commission, setting in motion the process to review the salary, allowances, and pension structure of central government employees and pensioners.

Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw said the ToR was finalized after extensive consultations with ministries, state governments, and employee associations. The newly constituted commission will begin work shortly and is expected to submit its report within 18 months of formation.

The panel will review pay scales and service conditions of over 50 lakh central government employees and nearly 69 lakh pensioners. Its recommendations are expected to come into effect from January 1, 2026, once approved by the government.

According to the approved ToR, the 8th Pay Commission will consider multiple factors, including the current economic situation, fiscal responsibility, impact on state finances, and the sustainability of pension liabilities. It will also assess disparities in pay and rationalize structures to ensure parity across government departments.

This marks the continuation of India’s decennial pay revision system, with the 7th Pay Commission’s recommendations having been implemented in 2016. The move is being seen as a major relief for government employees awaiting a pay hike, particularly amid rising inflation and living costs.

Experts note that while salary revisions could boost consumption and morale among public-sector staff, the government will need to balance fiscal prudence with populist expectations.

With the Cabinet approval, the groundwork has now been laid for what could become one of the most significant pay revisions affecting millions in the public sector ahead of the next general elections.