Good news for government employees. According to a report released by Ambit Capital on July 9, the 8th Pay Commission may be implemented in the financial year 2026-27 (FY27), and this can increase the salary and pension of government employees and pensioners by 30-34%. According to the report, about 1.12 crore employees and pensioners of the central government will get the benefit of this revised salary and pension, which will bring additional money to spend in the market and will boost consumption.

Which sectors will benefit?
Ambit believes that sectors like passenger vehicles (vehicles), BFSI (banking and finance), FMCG (fast-moving goods), and QSR (fast food chains) will benefit well from this. However, how big this benefit will be will depend on how much the actual salary increase is, which fitment factor is used, and when the commission is implemented. If there is a delay, employees may get more money in the form of arrears, which may increase their spending capacity at one go.

Salary is likely to increase from 14% to 54%

According to the report, there is a possibility of a salary increase of 14% at the lower level and 54% at the upper level. This will put an additional burden of Rs 1.3 lakh crore on the government. According to the brokerage report, the government will need additional financial support of Rs 1.3 lakh crore for these increases. For this, the government may have to take steps like a reduction in capital expenditure (Capex), an improvement in GST rates, or more dependence on dividends from PSU companies. Especially when the income from tax is slowing down and the expenditure is already fixed.

How effective was the 7th Pay Commission?

The 7th Pay Commission (January 2016 to December 2025) saw an average salary increase of just 14%, the lowest since 1970. In the previous pay commissions (6th and 7th), the government had cut Capex to handle revenue expenditure (Revex). Now that tax revenue (especially from income tax) is slowing down, the government will need measures like completing Capex through PSUs, relying on dividends, and GST reforms.

Changes in pension too

Under the Unified Pension Scheme being implemented from FY26, the government's share in the pension fund has increased from 14% to 18.5%. Out of this, 8.5% is such that the government can invest in different investment instruments as per its wish. If the government adopts international norms and invests 45% of this money in the stock market, then the investment in the stock market can increase from Rs 24,500 crore to Rs 46,500 crore, which will be about 7.7% of the net domestic flow of FY25.

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