January 16, 2025: The Union Cabinet has approved the 8th Pay Commission to revise the salaries and pensions of central government employees and retirees. The announcement was made by Union Minister Ashwini Vaishnaw on Thursday. While the Cabinet has granted its approval, details regarding the timeline for setting up the commission have not been disclosed.

The move comes just ahead of the Union Budget 2025 and is expected to result in a significant salary hike for millions of government employees and pensioners. Reports suggest the fitment factor, a key metric for determining revised salaries, might increase from 2.57 to 2.86. If implemented, this adjustment would substantially raise the basic pay, offering financial relief and higher disposable income to government employees and retirees.

The 8th Pay Commission will likely build upon the reforms introduced by the 7th Pay Commission, which was implemented in January 2016. The 7th Pay Commission replaced the older pay band and grade pay system with a simplified pay matrix, set a minimum salary of ₹18,000, and capped the maximum salary at ₹2.5 lakh for senior-most officials. It also introduced significant benefits, such as increasing the gratuity ceiling to ₹20 lakh and rationalizing allowances like housing rent allowance (HRA).

Earlier, the 6th Pay Commission, implemented in 2006, introduced a pay band and grade pay system, with a fitment factor of 1.86. At the time, the minimum salary was set at ₹7,000, while the maximum reached ₹80,000 for top-ranking officers. Over the years, these commissions have played a critical role in modernizing the pay structure and enhancing benefits for public servants.

The announcement of the 8th Pay Commission is being widely welcomed as it promises to address the evolving needs of government employees and pensioners. Beyond its impact on personal income, the anticipated salary revisions are likely to stimulate consumer spending, offering a potential boost to the economy ahead of the Union Budget. Further details on the timeline and recommendations of the commission are awaited.