Context:
• The Union Cabinet has approved the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC), which will review and revise the salary structure of nearly 50 lakh Central government employees.
Key Highlights:
- Commission Structure & Leadership
- The CPC, constituted in January 2025, is now fully operational with approved ToR.
- Justice Ranjana Prakash Desai (Retd.) will serve as the Chairperson.
- Prof. Pulak Ghosh will be the part-time member, and Pankaj Jain will act as Member-Secretary.
- The Commission will submit its report within 18 months.
- Scope and Considerations
- It will assess salaries, allowances, benefits, and overall compensation structures.
- Recommendations must factor in:
- Economic conditions
- Fiscal prudence
- Developmental needs
- Impact on State finances
- Consultation Process
- Key ministries consulted: Defence, Home, Railways, Personnel & Training.
- Coordination with State governments, many of whom extended support.
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Significance
- The setting up of the 8th CPC follows the in-principle approval granted in January 2025, indicating an expedited institutional process.
• The Commission’s mandate extends beyond Central government pay structures — it may also examine compensation and working conditions in Central PSUs and even private sector benchmarks as part of comparative analysis.
• Balancing employee expectations with fiscal sustainability will be central to the recommendations, especially given the large expenditure burden on the government.
• With nearly 50 lakh employees dependent on CPC outcomes, the exercise has major implications for consumption demand, government expenditure, and State–Centre fiscal dynamics.
• The collaborative approach involving Centre–State consultations ensures that the Commission’s recommendations do not adversely strain State budgets, many of which share financial obligations for pay revisions.
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