8th Pay Commission | 23 Jan 2025
The Union government has approved the formation of the 8th 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 7th Pay Commission (2016-2026) under the chairmanship of Justice Ashok Kumar Mathur.
- The 7th Pay Commission led to an increase of Rs 1 lakh crore in government expenditure in fiscal year 2016-17.
- 8th 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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