The absence of any salary revision even as January 2026 has passed has made it clear that the implementation of the 8th Central Pay Commission will be delayed. According to a recent report by rating agency ICRA, this delay could have significant fiscal consequences, especially if the recommendations are eventually implemented retrospectively from January 1, 2026.
The 8th Pay Commission was widely expected to come into force from January 2026, in line with the established 10-year cycle that saw the 7th Pay Commission implemented from January 1, 2016. However, ICRA notes that the commission’s report is still around 15–18 months away from submission, making an immediate salary revision unlikely, said a report by the Financial Express.
ICRA’s analysis, included in its Budget 2026–27 outlook, suggests that the central government’s financial exposure from the pay commission will largely materialise in FY2028 rather than in the near term. Once implemented, the recommendations are expected to sharply increase salary and pension expenditure, placing considerable pressure on government finances.
The agency expects that whenever the 8th Pay Commission is rolled out, the government is likely to make it effective retrospectively from January 1, 2026. This would result in the payment of arrears spanning 15 months or more in a single stretch, significantly magnifying the fiscal impact. ICRA estimates that salary expenditure could rise by a steep 40–50% in FY2028 alone.
Drawing on past experience, the report highlights how even limited arrears can strain the budget. During the implementation of the 7th Pay Commission, salary spending jumped by over 20% in one year despite arrears being restricted to just six months. In contrast, delays during the 6th Pay Commission led to arrears extending beyond two-and-a-half years, creating sustained fiscal pressure over multiple years.
To cushion the impact of the upcoming salary and pension burden, ICRA expects the government to front-load capital expenditure in FY2027. The report projects a nearly 14% increase in capex to around Rs 13.1 lakh crore, allowing infrastructure and development projects to advance while fiscal space remains relatively flexible.
For central government employees, the delay means the anticipated salary hike has been postponed rather than scrapped. While the eventual implementation could bring a substantial arrears payout, the extended wait adds to uncertainty for employees and complicates budget planning for the government.
Overall, ICRA’s assessment underlines that the 8th Pay Commission is no longer just a routine pay revision exercise. Instead, it has emerged as a major fiscal event—one that could reshape government spending priorities and influence multiple Union Budgets in the years ahead.
8th Pay Commission: How Budget 2026 Will Impact – Salary Hike Predictions
