Business
8th Pay Commission: Railways Trims Costs To Manage Wage And Pension Burden As Likely Effective Date Nears
Last Updated:
Indian Railways starts cost-cutting ahead of 8th Pay Commission, set for retrospective implementation from January 01, 2026, to manage higher wage and pension expenses.
8th Pay Commission impact: Railways tightens spending before Jan 1, 2026
8th Pay Commission: Even though the 8th Pay Commission is expected to submit its report within 18 months of its formation, the implementation of recommendations will be likely effected retrospectively from January 01, 2026.
With the likely date of implementation nears, Indian Railways has reportedly begun cost-cutting across maintenance, procurement and energy use to avoid a big financial burden in the form of higher wages and pensions to current and ex-employees once the 8th Pay Commission takes effect, according to Times of India report.
After delays, the 8th Pay Central Pay Commission has been finally constituted by the Central government in October this year with the notification of Terms of Reference (ToR) to review the wages and allowances of its staff and pensioners.
The pay panel is constituted every 10 years to review the wages and allowances of its workforce. The 7th Pay Commission’s recommendations were implemented from January 01, 2016, with arrears paid within the 2016-17 financial year.
According to a TOI report, Indian Railways recorded an operating ratio (OR) of 98.90 per cent in 2024–25, leaving a net revenue of Rs 1,341.31 crore.
For 2025–26, the Railways has set a target OR of 98.42 per cent, with net revenue estimated at Rs 3,041.31 crore, highlighting continued pressure on margins despite higher revenues.
As per TOI report quoting officials, the railway will reduce its reliance on borrowing as Indian Railway Finance Corporation (IRFC) annual payments are expected to decline from 2027-28 on the back of recent capital expenditures funding through gross budgetary support (GBS).
8th Pay Commission Implementation Timeline
In the latest update, Minister of State for Finance Pankaj Chaudhary has said the timing and funding of the 8th Pay Commission will be decided later.
“The 8th Central Pay Commission (CPC) has already been constituted. The Terms of Reference (ToR) of the 8th Central Pay Commission have been notified vide Ministry of Finance’ Resolution dated 03.11.2025. The number of Central Government employees is 50.14lakh and the number of pensioners is 69 lakh approximately. The date of implementation of the 8th Central Pay Commission shall be decided by the government. Government will make appropriate provision of funds for implementing the accepted recommendations of 8th CPC,” Chaudhary said in response to a query in the Lok Sabha on December 8, 2025. The question was about whether the government proposes to implement the 8th Pay Commission with effect from January 1, 2026.
He added that the 8th Central Pay Commission will devise the methodology and procedure for formulating its recommendations.
“As specified in the Resolution notified on November 3, 2025, the 8th Central Pay Commission will make its recommendations within 18 months from the date of its constitution,” the MoS Finance added.
December 15, 2025, 13:44 IST
Read More