However, the full implementation of salary and pension hikes in FY27 remains unlikely.
On the Budget Day, only three months are over since the formal constitution of 8th Pay Commission. "The panel has been given an 18-month deadline to submit its report, which makes it unlikely that the salary and pension hike would be rolled out in FY27," according to reports.
The speculation that the government intends to speed up implementation of salary hike has ground if any budgetary provision earmarked to absorb the fiscal impact of revised pay and pensions is announced in the Budget, said NDTV Profit in a report.
In such a scenario, the panel may expedite its consultation with key stakeholders, and present its report way before the deadline that lapses in May 2027, the report said.
Dearness allowance (DA) and dearness relief (DR) used to be reset to zero when a new pay commission’s recommendations are implemented and then they are then restored in stages.
However, in case of the 8th Pay Commission, even a relatively lower fitment factor may lead to sharper effective hikes, as the DA and DR are less than half of what they stood during the end of 7th Pay Commission, the report said.
Following the last revision in October, DA and DR stand at 58 per cent, the report said. The 7th Pay Commission had a fiscal impact of Rs 1.02 lakh crore, though the effective hike for employees was smaller after DA/DR adjustments, but the fiscal impact of 8th Pay Commission could be substantially larger at Rs 2.4-Rs 3.2 lakh crore due to a bigger workforce and more pensioners, it added.
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