Former Supreme Court judge to lead revamped pay‐review panel, with recommendations due within 18 months and implementation likely from January 2026.

New Delhi | October 28, 2025

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday approved the Terms of Reference (ToR) for the 8th Central Pay Commission (8th CPC) and formally appointed retired Supreme Court judge Justice Ranjana Prakash Desai as its Chairperson.

The commission is tasked with a pivotal revision of pay scales, allowances and pension regimes for central government employees and pensioners. It has been given 18 months from the date of its constitution to submit its recommendations, with likely implementation from 1 January 2026.

---

Composition and Scope

Under the new framework, Justice Desai will head the commission, aided by a part-time member, Pulak Ghosh (Professor, Indian Institute of Management Bangalore), and Pankaj Jain (Secretary, Ministry of Petroleum & Natural Gas) as Member-Secretary.

The ToR underscore the commission’s mandate to consider the country’s “economic conditions and the need for fiscal prudence,” ensure adequate resources for developmental and welfare measures, account for the unfunded cost of non-contributory pension schemes, and assess potential impacts on State Government finances.

While previous Pay Commissions placed extensive demands on their agenda, the government has adopted a relatively streamlined ToR for the 8th CPC. The staff side of the Joint Consultative Machinery had sought inclusion of demands such as reinstatement of the old pension scheme for post-2004 recruits and a revised “standard consumption norm” from 3 to 3.6 family consumption units — but these points were not explicitly incorporated.

---

Why this Appointment Matters

The timing and leadership of the 8th CPC carry significant implications for central employees and pensioners across India. The previous Pay Commission (the 7th CPC) had been constituted in 2014 and its recommendations took effect from 1 January 2016. With rising inflation, evolving pension liabilities and increased pressure on state budgets, there has been mounting demand for an early revision of pay and pensions.

By appointing Justice Desai — who has a distinguished judicial career and prior experience in heading government committees — the government signals its intent to give the pay-revision process both credibility and continuity. Desai’s prior roles include serving as a judge of the Supreme Court of India (2011–2014) and heading the Delimitation Commission for the Union Territory of Jammu & Kashmir.

---

Impacts and Expectations

The 8th CPC is expected to benefit approximately 5 million central government employees, including defence personnel, and roughly 6.9 million pensioners — making this one of the largest pay-review exercises in recent years.

Given the requirement to factor in state finances, the commission’s recommendations may also set the benchmark for many state government pay revisions, which frequently mirror central government decisions.

One of the closely watched parameters will be the “fitment factor” — the multiplier used to raise existing basic pay levels. During the 7th CPC, a fitment factor of 2.57 was applied, resulting in the minimum basic pay rising from ₹7,000 to ₹18,000. Speculation is already underway about what factor the 8th CPC might recommend.

---

Challenges Ahead

Despite optimism, the pathway is not without friction. Several central employee unions argue the ToR do not sufficiently address key demands: restoration of the old pension scheme for post-2004 recruits, higher medical allowances, education allowances, and other perks.

Also, while the Cabinet has given 18 months for the commission’s work, actual implementation may be further delayed due to the quantum of fiscal impact, inter-ministerial coordination, and approval by the Cabinet. The date of effect — though likely to be 1 January 2026 — will be formally decided once the interim report is submitted.

Moreover, the government’s insistence on fiscal discipline and the need to keep in mind unfunded pension liabilities hint at a careful balancing act. The commission cannot recommend major salary hikes without accounting for wider developmental and welfare spending.

---

What Employees and Pensioners Should Watch

For central employees and pensioners, the following key areas will merit monitoring over the next 18 months:

• The fitment factor recommended by the 8th CPC and its impact on minimum salaries.
• Whether the commission re-examines allowances (medical, education, hostel subsidy) and the post-2004 pension scheme.
• The timeline for implementation: whether recommendations will be applied retrospectively from 1 January 2026.
• The effects on state government employees, given that many state governments align their pay revisions with central norms.
• The government’s final decision on how much fiscal headroom is available for the pay revision, given competing demands on the budget.

Source: