8th Pay Commission: The approval of the 8th Pay Commission has set off a wave of discussions across the country. The main point of debate is how, while pay commissions put extra pressure on government finances, they also play a significant role in boosting the economy. The central government has brought a wave of happiness to nearly one crore government employees and pensioners ahead of the budget. On Thursday, January 16, the Union Cabinet approved the formation of the 8th Pay Commission for government employees and pensioners. Although setting up the Pay Commission increases the financial burden on the government, it also leads to a positive outcome—putting more money into people’s hands. This extra money stimulates demand in the economy, driving economic activity and, in turn, increasing the government’s GST revenue. Prime Minister Narendra Modi has also highlighted that the 8th Pay Commission will act as a catalyst for the economy. It is expected to drive both demand and consumption to higher levels. The immediate impact of this additional income is that people either save it in banks or spend it in the market. If the money flows into the market, it leads to an increase in the demand for goods and services. This has been observed every time government employees’ salaries have been raised in the past, helping the economy move forward. Each time a Pay Commission is introduced, it adds to the government’s expenses. This includes a rise in the salary bill, which increases the overall budget allocation. For example, the 6th Pay Commission resulted in an additional financial burden of ₹22,000 crore, while the 7th Pay Commission pushed that number to ₹1 lakh crore. Based on these trends, it is expected that the 8th Pay Commission will lead to a significant increase in the salary bill. The recommendations of the 7th Pay Commission are set to end on December 31, 2025, and the 8th Pay Commission is likely to be implemented the following year, in 2026-27.
