Centre likely to approve bonus for Railways employees ahead of Diwali: Sources

With Diwali round the corner, the Union Cabinet is likely to approve a bonus for Railways employees. The Cabinet is likely to clear the proposal for the productivity-linked bonus in its upcoming meeting, government sources told Business Today. 

The bonus, extended to non-gazetted railway employees, is meant to recognise their contribution to the efficiency and performance of the Indian Railways. Last year, nearly 11 lakh employees received the payout, boosting morale and festive spending nationwide. A similar announcement this year is expected to trigger a comparable ripple effect.

The timing is key, as retailers and businesses are banking on stronger demand this festive season, aided by recent GST cuts. A bonus for railway employees, a vast consumer base across urban and semi-urban India, could directly spur household consumption on items from electronics to apparel.

Economists note that such festive-linked payouts have a wider multiplier effect. With moderating inflation and policy support for consumer spending, the cash inflow could sustain demand momentum into the year’s final quarter. The government, meanwhile, is monitoring consumption trends while balancing fiscal prudence with growth.

Earlier this month, several railway federations sought an increase in the productivity-linked bonus paid to employees every year before Dussehra and the issuance of a gazette notification for the formation of the eighth pay commission. 

They also reiterated their long-pending demand to enhance the productivity-linked bonus. Indian Railways Employee Federation (IREF) said the minimum payment of productivity-linked bonus is being made based on the minimum salary of ₹7,000 per month of the sixth pay commission.

"However, under the seventh pay commission, the minimum salary is ₹18,000, which the railway employees are getting from January 1, 2016," Sarvjeet Singh, National General Secretary, IREF, told news agency PTI. 

He added that the government paying the productivity-linked bonus on the basis of the minimum salary of the sixth pay commission is "sheer injustice".

The All India Railwaymen's Federation (AIRF), too, demanded an increase in the productivity-linked bonus, and said the continuation of the monthly ceiling of ₹7,000 for its calculation is "wholly unjustified" and urgently requires realignment with current pay and wage structures.