8th Pay Commission

• 23 Jan 2025

Source: BS 

 The Union government has approved the formation of the 8^th Pay Commission, a move that will benefit 4.5 million central government employees and 6.8 million pensioners, including defence personnel. 

• Pay Commission (PC):  It assesses the pay scales, allowances, and benefits for central government employees, taking into account inflation and its impact on remuneration and the cost of living.   
  • A new PC is established every 10 years under the Department of Expenditure (Ministry of Finance) to revise salaries and pensions, ensuring fair compensation for government employees. Usually, a retired Supreme Court judge heads the PC. 
  • Its recommendations are often adopted by state-owned organizations as well. 
• Historical Context of Implications of PC: Since 1947, the Indian government has established 7 Pay Commissions, with the 7^th Pay Commission (2016-2026) under the chairmanship of Justice Ashok Kumar Mathur. 
  • The 7^th Pay Commission led to an increase of Rs 1 lakh crore in government expenditure in fiscal year 2016-17. 
• 8^th Pay Commission: It will likely propose formulas for revising the Dearness Allowance (DA) and Dearness Relief (DR) for employees and pensioners to counter inflation. 
  • The DA adjustment is based on the Consumer Price Index for Industrial Workers(CPI-IW), released monthly by the Labour Bureau, to track cost-of-living changes.  
  • The 8th Pay Commission aims to align government salaries with the rising cost of living, supporting employee welfare and economic growth. 

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