8th Pay Commission: Salary Hike From FY27 Or FY28? Kotak Report Shares Expected Timeline

8th Pay Commission Latest News: Even as the 8th Pay Commission received the Union Cabinet's nod in January, it is yet to be formally constituted by the government. This has sparked concerns over a potential delay in the revision of salaries and pensions of central government employees and retirees, respectively.

A report released by Kotak Institutional Equities on Monday shares an expected timeline for the implementation of salary and pension hike.

The revision may be rolled out as early as the October-December period of 2026, or by January-March 2027, the research report stated. "Based on previous CPC (Central Pay Commission) timelines, we expect 8th CPC recommendations to be implemented around 4QCY26/1QCY27."

This suggests that the salary and pension hikes may come into effect in the financial year ended March 31, 2027, or FY27. However, the Kotak report, citing historical precedent, points out that the pay panels need around 1.5 years to submit their reports, which is then scrutinised and approved by the government in three to nine months.

"We note that average time taken to submit the report is around 1.5 years from the date of CPC formation (1.5 years for 6th CPC and 7th CPC; around three years for 4 th CPC and 5th CPC). The time taken by the government to implement after report submission has been 3-9 months," it said.

If one takes this into consideration, then even if the 8th Pay Commission is set up next month, it may require at least 18 months—till February 2026—to submit its report. The report may need another three to nine months to get the Cabinet's final nod.

Going by this timeline, then the implementation of 8th Pay Commission could well be delayed till the second half of 2027, which would fall under financial year 2028 (FY28).

As per the Kotak report, the 8th Pay Commission may recommend a fitment factor of 1.8, which will be significantly lower as compared to 2.57 recommended by the 7th Pay Commission.

The 1.8-fitment factor can raise the basic salary by 180%. But since the dearness allowance is reset to zero after the rollout of a new pay commission, the real growth in salary would be much lower.

At present, the DA paid to central government employees stands at 55% of the basic salary. The allowance is raised biannually by the government to offset the impact of inflation.

Currently, a minimum salary of Rs 18,000 has an additional DA component of Rs 9,900 (55% of basic wage). This takes the total to Rs 27,990, excluding some of the other smaller allowances that are paid.

If 1.8 is the fitment factor recommended by the 8th Pay Commission, then the minimum basic wage would rise from Rs 18,000 to around Rs 32,000. However, the resetting of DA to zero would result in a real wage growth of around 13%, the Kotak report pointed out.

This would be significantly lower as compared to the 14% real wage growth seen after the implementation of 7th Pay Commission, and 54% after the rollout of 6th Pay Commission.

The fiscal impact of the 8th Pay Commission is expected to be Rs 2.4-3.2 lakh crore, as compared the estimated burden of Rs 1.02 lakh crore on the exchequer following the implementation of 7th Pay Commission in FY17.