8th Pay Commission: Impact on public finance, employee salary & pension
The 8th Pay Commission's TOR approval sparks hopes for salary, allowance, and pension revisions for government employees and pensioners. However, experts warn of a massive financial burden, potentially up to Rs 9 lakh crore, significantly impacting central and state budgets and India's public finances. Implementation is projected within 2-3 years, with pensions now confirmed under review.
New Delhi: The 8th Pay Commission's Term of Reference (TOR) has been approved, which has strengthened the expectations of crores of government employees and pensioners. The process of change in salary, allowances and pensions is now going to start formally. However, this good news is only for the employees, not for the government. Experts believe that once this commission is implemented, there will be a huge financial burden on the budget of the central and states.
After the constitution of the Commission, the government has now started the phase of preparing a detailed report. This report will be prepared on the basis of several rounds of meetings and data review. After this, a group of ministers will examine it and then send it to the government for a final decision. According to experts, this entire journey can be about two to three years, so it is not right to expect an immediate salary hike right now.
Financial Burden of 8th Pay Commission
Member of the Economic Advisory Council to the Prime Minister and renowned economist Neelkanth Mishra has issued a clear warning that once the implementation of the 8th Pay Commission, the government's public finance will be affected. According to him, if the recommendations are implemented, the total payment of salary and pension can reach more than Rs 4 lakh crore. If the last few dues are added, this amount can go up to about Rs 9 lakh crore.
8th Pay Commission Implementation
This means that the government will have to see in every budget that comes, how to handle such huge expenditure and how it does not affect the rest of the schemes. Mishra said that keeping in mind the debt-to-GDP rules, it would be very challenging for the government to implement the recommendations of the Pay Commission.
This warning comes at a time when India is preparing to change its debt-GDP treasury rules from 2027. Mishra said that inflation is low now, due to which there is some extra space in the economy, but the huge cost of the Pay Commission will reduce this space to a great extent. That means the government will have limited scope to control spending and savings.
When the TOR was released, complaints were lodged that it did not explicitly mention pension revision. This led to the apprehension that pensions might be excluded from the purview of the Commission, which was a serious issue for more than 69 million pensioners. But now the government has made it clear in the Rajya Sabha that the Pay Commission will give recommendations on salary, allowances and pensions. This has almost eliminated the anxiety of pensioners.