8th Pay Commission soon? Here's what we know so far
Riya R Alex
Published 23 May 2025, 09:22 AM IST 8th Pay Commission is expected by 2026.
As the 8th Pay Commission is expected to be set up soon, employee unions are likely to concentrate on the fitment factor and related details for salary and pension adjustments.
The 8th Pay Commission could be expected to take effect by January 1, 2026, according to reports.
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Business Standard
9 hours ago
- Business Standard
Which consumer stocks to buy as RBI cuts repo rate, CRR, inflation eases?
Consumption-related stocks in India: With the Reserve Bank of India (RBI) delivering a double booster for liquidity – interest rate and CRR (cash reserve ratio) cut – in its review of the monetary policy last week, analysts expect India's consumer demand to witness a 'gradual' recovery in the coming months. Related stocks, they said, could witness a meaningful rally in the second half of the financial year 2025-26 (H2FY26) and the index reverse its underperformance, driven by improved earnings, curtailed inflation, and supportive valuations. Thus far in calendar year 2025 (till June 6), the Nifty Consumption index has risen 2.2 per cent on the NSE as against a 5.7 per cent rally in the Nifty50 index, ACE Equity data shows. Individual stocks have, however, delivered mixed returns with Tata Consumer Products, InterGlobe Aviation, and Avenue Supermarts surging between 18 per cent and 22 per cent, while Varun Beverages, Trent, and ITC declining up to 25 per cent during the period. 'Consumption-related companies under-delivered in CY25 amid sluggish volume growth and sustained margin pressures from high raw material costs. However, with supportive policy action, fiscal stimulus, and moderating inflation, we expect overall consumption demand to improve steadily by H2-FY26—supporting a rebound in the performance of the Nifty Consumption index,' said Darshil Shah, senior research analyst at Prime Research, HDFC Securities. India's consumption Sector: An Overview After the government's push to drive consumption demand in India, via higher limit for taxable income to claim tax rebate, the RBI, on June 6, front-loaded its monetary policy easing and slashed the repo rate by 50 basis points (bps) to 5.5 per cent. It also announced a 100-bps cut in CRR, to be executed in four tranches, to 3 per cent from 4 per cent. According to Seshadri Sen, head of research and strategist at Emkay Global Financial Services, the repo rate cut will help in accelerating credit flow to boost consumption during the festival season, considering the lag effect. The CRR cut, meanwhile, may help transmission and banks' propensity to lend aiding credit to automobile, consumer durables, power generation (especially green energy), and real estate sectors. The ₹2.5-trillion liquidity infusion by November (through CRR reduction), coinciding with income tax relief and the expected rollout of 8th Pay Commission benefits, is well-placed to revive the consumption basket, analysts added. These tailwinds, however, need to outweigh macroeconomic challenges, they cautioned. Those at Nomura said that with easing input costs, regional competition could grow faster than that for organized companies, leading to an overhang on market share and volume. Notably, a recent report by market research firm Kantar said that unbranded products drove most of the urban consumption of fast-moving consumer goods (FMCG) in FY25. Consumption stocks: Where to invest? Darshil Shah of HDFC Securities prefers Godrej Consumer, Marico, Maruti Suzuki, and Macrotech Developers from the consumption basket. Nomura, meanwhile, suggests investors focus on companies that have superior growth (in volumes / pricing) trajectory than peers/industry; investments in distribution, digitisation and R&D capabilities to support innovative new launches; and have strong brands, pricing power and higher saliency of premium portfolio to stand out. The brokerage picks Godrej Consumer Products, Marico, and Tata Consumer Products as its top consumption bets amid hopes of margin expansion, driving strong Ebitda growth, in H2FY26. That said, Seshadri Sen of Emkay Global Financial Services cautions that since overall market upside is limited from here, outperformance in consumption stocks will be dependent on earnings upgrades. 'Investors will have to wait till H2FY26 to see any meaningful upside,' he said.
Time of India
a day ago
- Time of India
8th Pay Commission salary hike may miss January 2026 deadline: Will it impact fitment factor calculation?
Why the 8th Pay Commission might be delayed beyond January 2026? Live Events Fitment factor Dearness Allowance (DA) to be merged with basic pay Pensioners may see revised benefits What government employees should prepare for For nearly 35 lakh central government employees and over 67 lakh pensioners, the 8th Pay Commission has become a source of speculation. With growing chatter around possible pay hikes and revised pension benefits, expectations are soaring. Despite the excitement, there's still no official word from the government on when the 8th Pay Commission will be constituted, leaving many in employee unions have begun voicing concern over the delay, urging the government to form the Commission well in advance to ensure timely implementation and reduce uncertainty for both employees and 7th Pay Commission, which came into effect in January 2016, was announced nearly two years prior, in February 2014. That timeline gave enough room for report submission, cabinet approval, and a timely rollout. However, as of mid-2025, the 8th Pay Commission is yet to be formed, and the crucial Terms of Reference (ToR), which define the scope and goals of the commission, haven't been finalised officials have confirmed that internal discussions are underway, but given the pace of bureaucratic processes, the rollout may stretch well beyond the expected January 1, 2026 timeline. Even if the Commission is announced by the end of this year, historical patterns indicate a gap of 18-24 months before the recommendations are ready for implementation. At this pace, the hike might only materialise by late 2026 or early to the delay are fiscal constraints, with the government balancing welfare spending, election promises, and fiscal deficit targets. A generous hike could significantly strain the exchequer, prompting policymakers to tread carefully.A major part of the salary revision hinges on the fitment factor, Fitment factor is the number used to recalculate an employee's basic salary. In the 7th Pay Commission, this was set at 2.57, raising the minimum pay from Rs 7,000 to Rs 18,000. Going by the views expressed by various experts 8th Pay Commission could recommend a fitment factor between 2.5 and 2.86. "Considering the inflation factor, there are indications that the fitment factor may stay between 2.5- 2.8 times, which will give a significant boost to employee salaries between Rs 40,000 and Rs 45,000," says Krishnendu Chatterjee, Vice President at the top-end 2.86 figure is accepted, the minimum basic salary could climb to over Rs 51,000. However, due to its fiscal implications, such a steep hike may be challenging. A 2.6x to 2.7x hike appears to be more likely, providing a significant increase while keeping the government's finances in fitment factor for the 7th Pay Commission was 2.57 and the minimum basic salary was hiked to Rs 18,000 from Rs 7,000. For the 6th Pay Commission, the fitment factor was 1.86 and the minimum basic salary was raised from Rs 2,750 to Rs 7, likely shift is the merger of the Dearness Allowance with the basic salary. Currently pegged at around 55% effective from January 2025, DA helps offset the impact of inflation and is revised twice in a year. Before the effective date of 8th Pay Commission early next year, there is one more DA hike is due to be announced in coming months which will be effective from July 2025. When a new Pay Commission is implemented, DA accumulated up to that point is typically merged into the revised basic this increases the overall salary package, it also means future DA hikes start from zero. Employees will see a rise in gross salary and related allowances, such as HRA and transport, but may also experience low DA in the near term. However, a higher base salary will mean that each DA hike will mean a higher increase in implementation of the 8th Pay Commission is not only being eagerly awaited by salaried employees. Nearly 67 lakh government pensioners are also impacted by any revision in the pay scale. Previous Pay Commissions have included changes in pension calculation formulas and benefits, and similar adjustments are expected this time as merger of Dearness Relief (DR) into basic pension also affects pensioners, as their payouts are tied to similar structures. Any revision in the base figures could significantly alter monthly pension employees' associations have echoed the concerns of serving staff, pushing for greater clarity from the government on how pension recalculations will be carried out in the new the uncertainty, a few things seem inevitable. A revised pay structure is coming, but it may take longer than expected. The eventual hike could push minimum salaries up to Rs 40,000 - Rs 45,000, with pension adjustments following suit. DA will reset, but higher allowances may offset the initial flattening in salary government staff would do well to temper expectations, at least in terms of timing. The gains could be significant, but the road to them may be more drawn out than previous 8th Pay Commission is aimed to deliver significant financial changes for government employees and pensioners. Yet, the pace of bureaucracy, pending approvals, and fiscal balancing may delay the implementation beyond the earlier-set target of January 2026.
India.com
2 days ago
- India.com
8th Pay Commission: Will Commuted Pension Be Restored In 12 Years Instead Of 15 Years? Central Govt Employees See Hope, The Reason Is...
photoDetails english 2913166 Updated:Jun 09, 2025, 10:26 AM IST Commuted Pension: Central Govt Employees See Hope, The Reason Is... 1 / 7 The central government employees have long called for commuted pensions to be reinstated. Employee organizations want the government to shorten the commutation pension period to 12 years as it currently restores it after 15 years from the date of commutation. In March this year, the demand to shorten commutation of pension was again raised in the 34th meeting of SCOVA (Standing Committee of Voluntary Agencies). Finance Department's Assertion On Commuted Pension Issue 2 / 7 At the SCOVA meeting, held on 11 March 2025, the issue of commuted pension was raised during which the Finance Department had informed the same can now be included in the Terms of Reference (ToR) of the 8th Pay Commission. And thus, the issue was removed from the agenda of the SCOVA meeting, Finance Department's assertion that a formal decision can now be taken only via 8th Pay Commission's recommendations. What Is A Commuted Pension? 3 / 7 Commuted pension is an advance payment that you get in one lump sum and that is subtracted from your whole pension fund. Simply put, choosing a commuted pension allows you to get a one-time payment right away and the rest amount in fixed installments throughout your lifetime. The amount commuted will be deducted from the monthly pension, and it will be restored once 15 years have passed since the day the converted pension value was received. Employees of the Central Government are eligible to receive a lump sum payment of up to 40% of their pension. What Is The Issue Concerning Commuted Pensions? 4 / 7 Employee organizations want the government to shorten the 15-year commutation period for retirees' pensions to 12 years. They also called for the 8th Pay Commission to be established right away and to include their demands. The National Council (Staff Side) Joint Consultative Machinery (NCJCM) had also previously urged the central government to reduce the commuted pension restoration period from 15 years to 12 years, citing no rationale for recovering the pension after that time. Why Should The Commutation Period Be 12 Years? 5 / 7 Employees are arguing for a 12-year restoration period for adjusted (commuted) pensions, stating that the 15-year reduction is unfair in light of rising inflation. Additionally, while they are employed, employees are already bearing taxes and deduction. A 12-year restoration period will provide relief to millions of retiring employees. Historical Background Of Pension Commutation Period 6 / 7 The Confederation of Central Government Employees and Workers had earlier urged the government to examine the pension commutation rules which were created 38 years ago by revising Rule 10A of the Central Civil Services (Commutation of Pension) Rules, 1981. Additionally, the Confederation attached a detailed note outlining why the Supreme Court judgement in Common Cause (supra) of 1986 requires a new look into the issue since many parameters have changed in the last 38 years. In its letter, the Confederation cited the 5th Pay Commission report, which recommended reducing the 15 years for commuted pension restoration to 12 years. According to the note, the central government has neither accepted nor rejected it. What Is The Government's Take On The Issue? 7 / 7 Prime Minister Narendra Modi had approved the establishment of the 8th Pay Commission which is set to be implemented from January 1, 2026. The government is currently deciding the terms and conditions of the commission, however, no formal announcement has been made regarding pension commutation and restoration period. However, with the approval of the establishment of the 8th Pay Commission, employees are hopeful that the government may reduce the commuted pension restoration period from 15 to 12 years.
