Although the 8th Pay Commission is expected to submit its recommendations within 18 months of its formation, the government is likely to implement the changes retrospectively from January 1, 2026. As this date approaches, government departments are preparing for the financial impact of higher salaries and pensions for employees and retirees.
Why Indian Railways Is Cutting Costs Ahead of 8th Pay Commission
With the expected rise in wage and pension liabilities, Indian Railways has reportedly begun tightening expenses. According to the report, the railways is reducing spending on maintenance, procurement, and energy usage to manage future financial pressure. These measures are aimed at minimising the burden once the 8th Pay Commission recommendations come into force.
When Was the 8th Central Pay Commission Formed?
After months of delay, the Central government officially constituted the 8th Central Pay Commission in October this year. The notification of its Terms of Reference (ToR) authorises the panel to review pay scales, allowances, and pensions of central government employees and pensioners. Pay commissions are usually set up every 10 years to revise compensation structures.
Indian Railways Operating Ratio and Financial Health Explained
Indian Railways recorded an operating ratio of 98.90 per cent in 2024–25. This resulted in a net revenue of ₹1,341.31 crore. For 2025–26, the railways has targeted an operating ratio of 98.42 per cent, with estimated net revenue of ₹3,041.31 crore. Despite improved revenue projections, margins are expected to remain tight.
Why Railways Plans to Reduce Borrowing from IRFC
Officials cited in the report said Indian Railways intends to cut down its dependence on loans. Annual repayments to the Indian Railway Finance Corporation (IRFC) are expected to decline from 2027–28. This shift is largely due to capital expenditure now being funded through gross budgetary support (GBS), rather than borrowings.
What Is the Timeline for 8th Pay Commission Recommendations?
According to the latest update, the 8th Central Pay Commission has been given 18 months from the date of its constitution to finalise its recommendations. The panel will also decide its own methodology and procedures for evaluating pay structures.
What Did the Government Say About 8th Pay Commission Implementation?
Minister of State for Finance Pankaj Chaudhary said in the Lok Sabha that the timing and funding of the 8th Pay Commission will be decided later. “The 8th Central Pay Commission (CPC) has already been constituted. The Terms of Reference (ToR) of the 8th Central Pay Commission have been notified vide Ministry of Finance’ Resolution dated 03.11.2025. The number of Central Government employees is 50.14 lakh and the number of pensioners is 69 lakh approximately. The date of implementation of the 8th Central Pay Commission shall be decided by the government. Government will make appropriate provision of funds for implementing the accepted recommendations of 8th CPC,” Chaudhary said in response to a Lok Sabha query on December 8, 2025.
How Many Employees and Pensioners Will Be Affected?
According to the government, around 50.14 lakh central government employees and nearly 69 lakh pensioners are expected to be impacted by the recommendations of the 8th Pay Commission.
Also Read: 8th Pay Commission Updates: Expected Salary Increase, Fitment Factor & Pension Revision
