8th Pay Commission: Kotak Equities says this on rollout timing, minimum salary

The 8th Central Pay Commission (CPC) is expected to be rolled out by late 2026 or early 2027, according to a report by Kotak Institutional Equities. The government is currently finalising the Terms of Reference (ToR) and has yet to appoint commission members. The timeline appears to mirror previous commissions, which typically took about 1.5 years to submit their reports followed by an additional 3 to 9 months for implementation after receiving Cabinet approval.

Kotak forecasts that the minimum pay could rise from ₹18,000 to approximately ₹30,000, indicating a fitment factor of around 1.8, resulting in a real pay increase of about 13% for the employees affected.

The potential fiscal impact of the 8th CPC is estimated to be around 0.6–0.8% of the GDP, translating to an additional outlay of ₹2.4–3.2 lakh crore. Approximately 3.3 million central government employees, particularly the Grade C staff who constitute nearly 90% of the central workforce, stand to benefit the most from this pay revision.

Historically, such pay revisions have provided temporary boosts to consumption and savings, particularly impacting sectors like automobiles and consumer staples, although these gains are typically short-lived.

Furthermore, Kotak suggests that while the next CPC may offer a temporary boost to consumption and savings, the real impact will likely be experienced in the form of increased savings in both physical and financial assets, such as equities and deposits. The firm anticipates incremental savings of ₹1–1.5 lakh crore following the pay hike.

Past commissions, such as the 7th CPC coupled with the One Rank One Pension scheme, had significant impacts, adding about two percentage points to GDP growth in FY17.