8th Pay Commission to go live in India next month
What's the story
The Indian government is moving closer to setting up the Eighth Pay Commission, with its terms of reference likely to be sent to the Union Cabinet for approval by early next month.
A formal notification will follow this clearance, permitting the Commission to begin functioning from April.
The Finance Ministry has sought recommendations from key departments such as Defense, Home Affairs, and the Department of Personnel and Training (DoPT) on the Commission's mandate.
Role
The Commission will suggest salary structure changes
Upon its formal establishment, the Eighth Pay Commission will review and propose changes to the salary structures for central government employees.
The Finance Ministry has already received some feedback on these terms and is now awaiting final suggestions.
"We have got some inputs. Some are still pending," a senior government official told Moneycontrol.
"It will be sent to the cabinet this month or early next month for approval."
Impact
It will impact 50L employees
The Eighth Pay Commission will affect over 50 lakh central government employees and pensioners (including defense personnel) significantly.
This is likely to have a major impact on government finances.
The financial burden of the Seventh Pay Commission, which was implemented in 2016, led to an estimated ₹1 lakh crore increase in expenditure in FY17.
However, the financial burden of the new Commission will only be realized from FY27.
Benefits
New Commission to boost consumption, economic growth
The upcoming pay revisions are also tipped to boost consumption and economic growth, thus enhancing the quality of life of government employees.
Since 1947, seven pay commissions have been constituted with the last one being implemented in 2016.
Each commission has been instrumental in deciding salary structures, allowances as well as pension benefits for government employees hugely impacting public expenditure.