Relevance: GS Paper II – Governance & Public Administration
Source: Indian Express, India Today
Context / Why in News
The Government of India has announced the formation of the 8th Central Pay Commission (CPC) to revise salaries, pensions, and allowances for central government employees and pensioners.
What is a Pay Commission?
Aspect | Explanation |
| Constitution of Commission | Set up by the Union Government roughly every 10 years to review and recommend changes to pay, pension, and service conditions. |
| Composition | Usually includes a Chairperson and experts from administration, finance, and public policy. |
| Objective | To ensure fair, inflation-adjusted remuneration and parity between government and private sectors. |
| Fitment Factor | A multiplier applied to existing basic pay to determine revised pay. The 7th CPC used 2.57 as the fitment factor. |
| Scope of Application | Salaries, pensions, and allowances for central government employees and pensioners |
Key Expected Recommendations
Area | Likely Proposal |
| Salary Revision | Fitment factor may range between 1.83 to 2.46, implying a 30–34% pay hike. |
| Pension Revision | Align pension with new basic pay and matrix system. |
| Allowances | Review of Dearness, Travel, and Housing allowances. |
| Effective Date | Implementation expected from January 2026. |
Issues Flagged and Fixes
Issue | Proposed Fix / Suggestion |
| Outdated inflation metrics | Adopt a dynamic inflation index reflecting urban and rural cost of living. |
| Fiscal burden on government finances | Implement in phases to maintain fiscal discipline. |
| Delay in Commission setup | Define time-bound Terms of Reference for faster implementation. |
Significance
- Affects nearly 1.15 crore beneficiaries (employees and pensioners).
- Enhances employee morale, administrative efficiency, and public service delivery.
- Balances social welfare with fiscal sustainability, aligning with SDG 8 – Decent Work and Economic Growth.
One-line Wrap:
The 8th Pay Commission aims to rationalise government pay structures — balancing employee welfare, inflation adjustment, and fiscal responsibility.
UPSC Prelims Practice Question
With reference to the Central Pay Commission in India, consider the following statements:
- It is a constitutional body established under Article 280.
- The Fitment Factor is used to revise the basic pay of government employees.
- The 8th Central Pay Commission’s recommendations are expected to be implemented from 2026.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (b)
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