What is the 8th Pay Commission and when will it take effect?

It is the next central pay revision for government employees and pensioners. The commission was set up on November 3, 2025, and is slated to revise pay and pensions from January 1, 2026, subject to final notification. It will update the pay matrix, fitment factor, and keep DA and DR adjustments in place.

How does the fitment factor 2.15 affect my basic pay?

The fitment factor multiplies your existing basic pay to set a new basic. At 2.15, the basic more than doubles. For example, ₹30,000 becomes ₹64,500 before allowances and deductions. Actual in-hand pay will vary with house rent allowance, transport, deductions, and grade-specific rules after notification.

What happens to DA hike 2025 when the new structure starts?

DA hikes in 2025 should continue on the current base, likely the last full-year cycle before the revised matrix takes effect in 2026. After January 1, 2026, DA is expected to reset to the new base and continue on a semiannual timetable, helping protect real incomes against inflation.

Will pensions change under the Unified Pension Scheme with the 8th Pay Commission?

Pensions typically update off the revised basic, with DR continuing. The Unified Pension Scheme is part of the policy framework, but final rules will decide exact interactions for NPS-covered staff. Expect clarity at notification time. Until then, treat pension projections as preliminary and subject to official guidance.

How could this impact markets between FY26 and FY28?

A higher wage bill may raise borrowing, pressuring long-duration yields. At the same time, higher disposable income can lift consumption in FMCG, autos, small appliances, and housing. Track the FY26 Budget, borrowing calendars, and RBI operations to gauge rate trends, and watch management commentary on demand in results.

Law and Government

8th Pay Commission, December 26: 2.15 Fitment Could Double Basic Pay

ByHuzaifa Zahoor December 26, 2025December 26, 2025

India’s 8th pay commission is in focus as investors assess salary, pension, and fiscal effects ahead of FY26. Constituted on November 3, 2025, it is set to revise pay and pensions from January 1, 2026. A potential fitment factor of 2.15 could more than double basic pay, while DA and DR are expected to continue semiannual revisions. We explain how these changes may affect government finances, bond supply, and consumption trends in India, and what to watch across FY26 to FY28.