8th Pay Commission: Railways Plans Cost-Cutting Ahead Of Wage Revision, Says Report

Indian Railways is reportedly rolling out cost-cutting measures across maintenance, procurement and energy segments to strengthen its finances ahead of higher wage outgo expected from the Eighth Pay Commission, according to reports.

The 8th Central Pay Commission, set up in January 2024, has been tasked with reviewing pay, allowances and pensions of central government employees. Its recommendations are expected to come into effect from Jan. 1, 2026, and will cover nearly 50 lakh serving employees, including defence personnel, as well as around 69 lakh pensioners. The commission is to be headed by former Supreme Court judge Ranjana Prakash Desai and is expected to submit its report within 18 months, along with interim recommendations as they are finalised.

According to a report by Times of India, Railways has begun preparing for the financial impact of higher salaries by tightening costs and improving operational efficiency. In fiscal 2025, Indian Railways recorded an operating ratio of 98.90%, leaving a modest net revenue of Rs 1,341.31 crore. For financial year 2026, the transporter is targeting a marginal improvement, with an operating ratio of 98.42% and projected net revenue of Rs 3,041.31 crore.

Officials cited in the report said the focus is on ensuring the organisation’s finances are robust enough to absorb the eventual wage hike when the new pay structure is implemented. One of the key relief factors expected is a reduction in annual payments to the Indian Railway Finance Corporation in fiscal 2028, as recent capital expenditure has increasingly been funded through gross budgetary support rather than borrowings.

Railway officials also confirmed that there are no plans for fresh short-term borrowing, according to the report. In addition, freight earnings are expected to rise meaningfully over the next few years. An official told TOI that annual freight revenue could increase by around Rs 15,000 crore by the time higher wages need to be paid in fiscal 2028, providing further support to the Railways’ financial position.

Even as the Centre is yet to formally constitute the 8th Pay Commission, employee unions remain confident that the revised pay structure will be implemented on schedule. All India Railwaymen’s Federation General Secretary Shiv Gopal Mishra said he expects the wage hike to take effect from Jan. 1, 2026.