8th Pay Commission: More than 1.1 crore central government employees and pensioners are closely following Finance Minister Nirmala Sitharaman’s Union Budget 2026–27 speech on Sunday. They are looking for any signal that the government might fast-track the 8th Pay Commission.Â
The main concern among central government employees is how salaries and Dearness Allowance (DA) will be handled during the transition phase. Past patterns show that when a new Pay Commission is implemented, the government usually provides arrears covering the full transition period.
Ahead of the 8th Pay Commission rollout, a 4% hike in Dearness Allowance (DA) is expected, raising it from 55% to 59%. This increase is likely to be announced around Diwali and will offer immediate financial relief to more than 1.2 crore employees and pensioners, making it an important development ahead of the new pay structure during Budget 2026 announcement.
8th Pay Commission: Budget Allocation Could Indicate Faster Action
There is speculation that the government may speed up the salary revision process if the Budget sets aside funds to handle the extra financial burden of increased pay and pensions. The commission reportedly could speed up its talks with important stakeholders and submit its report well before the deadline of May 2027.
8th Pay Commission: DA and DR Rules May Influence Salary Gains
Normally, when a new Pay Commission’s recommendations are implemented, Dearness Allowance (DA) and Dearness Relief (DR) are reduced to zero and then raised step by step later. However, under the 8th Pay Commission, even a lower fitment factor might still result in a noticeable rise in pay. This is because DA and DR are currently much lower than they were at the end of the 7th Pay Commission, the report explained.
After the latest revision in October, DA and DR are expected at 58 per cent, the report said.
Financial Burden Expected to Rise Sharply
The 7th Pay Commission created a financial burden of Rs 1.02 lakh crore. Although the actual salary increase felt by employees was smaller after DA/DR adjustments, the cost of the 8th Pay Commission could be much higher. Estimates suggest an impact between Rs 2.4 lakh crore and Rs 3.2 lakh crore, mainly because there are more employees and pensioners now.
