Union Cabinet Approves Terms of Reference for 8th Central Pay Commission

The Union Cabinet on Tuesday approved the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC), marking a major step toward revising the pay structure and retirement benefits of central government employees.

The Centre had announced the formation of the 8th CPC in January 2025 to review and recommend changes in the salaries, allowances, and pensions of central government staff.

Announcing the decision, Union Minister Ashwini Vaishnaw said,

“The in-principle approval for the formation of the 8th Central Pay Commission was granted only recently in January, and within a short span, the commission has now been formally constituted. This is a major step that involves extensive consultations.”

He added that ministries with large employee bases — including Defence, Home, Railways, and the Department of Personnel and Training (DoPT) — participated in the consultative process.

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Commission Composition and Timeline

The 8th CPC will comprise:

• Justice Ranjana Prakash Desai — Chairperson

• Professor Pulak Ghosh (IIM Bangalore) — Part-time Member

• Pankaj Jain, Petroleum Secretary — Member-Secretary

The Commission has been tasked with submitting its recommendations within 18 months from the date of its constitution.

“There are about 50 lakh central government employees, and consultations were also held with several state governments, most of which extended their cooperation,” Mr. Vaishnaw said.

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Key Mandate and Considerations

According to the government, the 8th CPC’s recommendations must strike a balance between employee welfare and fiscal prudence. The panel will consider:

• The country’s economic conditions and need for fiscal discipline;

• Ensuring adequate resources for developmental and welfare expenditure;

• The unfunded cost of non-contributory pension schemes;

• The impact on state finances; and

• Comparisons with the emolument structures in public sector undertakings and the private sector.

The Commission also has the option to submit interim reports on specific issues as and when it finalises its recommendations.