Govt expects to bear 8th Pay Commission cost only from FY27, says Expenditure Secy Manoj Govil

Expenditure Secy Manoj Govil

The Budget for 2025-26 has not factored in any expenditure that may arise on account of implementing the 8th Pay Commission’s recommendations, given that the report may take another year to be submitted and subsequently approved, Expenditures Secretary Manoj Govil told Moneycontrol.

The finance ministry has written to Ministry of Defence and Home Affairs as well as the Department of Personnel and Training to suggest the terms of reference for the Commission, following which the Centre will approve them.

The commission will start functioning once the terms of reference is approved, Govil added.

“Previous commissions have taken more than one year to present the report. If the commission is set up even in the month of March 2025, the report should come in by March 2026, though it could take less than a year. So, for FY26 we don’t see any impact of the 8th pay commission,” Govil told Moneycontrol in an interview.

Prime Minister Narendra Modi last month approved the formation of the 8th Pay Commission for central government employees.

The term of the 7th pay commission, presently in operation, is set to end in 2026.

Pay commissions are set up once in 10 years to recommend changes in the salary structure of government employees.

On whether the government has an initial estimate of the additional cost following the implementation of the 8th Pay Commission, Govil said that it will be for the Commission to decide after factoring in the conditions that confront them.

“We have some information on how it cost under the 7th Pay Commission, but every commission is different, the conditions that confront them are different, so it will be for the commission to decide, but it is not even expected to have an impact on the Budget for FY26, since the earliest one can expect the report is when the budgeted period is possibly over,” the secretary said.

“Even if the Commission’s recommendation is accepted in FY27, it is possible some of the recommendations may be given effect to from January 1, 2026, for those three months, which fall in FY26. But since those will be arrears, the expenditure will be rolled over to 2026-27,” Govil explained.