8th Pay Commission: Railways on alert ahead of the 8th Pay Commission; will it affect railway employees?
Indian Railways is already planning to manage the increased salary expenses that will result from the 8th Pay Commission. To strengthen its financial position before the Pay Commission's recommendations are implemented, the railways are taking steps to cut costs related to maintenance, procurement, and energy.
According to a Times of India report, the railways are undertaking cost-cutting measures to absorb the burden of increased employee salaries. The 8th Central Pay Commission, constituted in January 2024, will review the salaries, allowances, and pensions of central government employees. This commission will study changes in employee salaries and other benefits and provide its recommendations.
50 lakh employees to benefit
The commission, headed by former Supreme Court judge Ranjana Prakash Desai, is expected to implement its recommendations from January 1, 2026. These recommendations will affect approximately 50 lakh central government employees, including those in the defense services, and 69 lakh pensioners.
The commission will prepare its report within 18 months and will also submit an interim report if needed. According to the TOI report, Indian Railways had an operating ratio of 98.90% in the financial year 2024-25, resulting in a net income of Rs 1,341.31 crore. The target operating ratio for 2025-26 is 98.42%, with an expected net income of Rs 3,041.31 crore.
No shortage of funds
Meanwhile, the annual payments to the Indian Railway Finance Corporation (IRFC) are likely to decrease in the financial year 2027-28, as recent large infrastructure expenditures have been met through Government Budgetary Support (GBS). Officials told TOI that there are currently no plans to take on new short-term debt. According to an official, by 2027-28, when the salary burden increases, the annual revenue from freight transport will also increase by approximately Rs 15,000 crore. The railways will ensure that its financial position is strong enough to easily handle this expenditure. He added that there will be no shortage of funds.
7th Pay Commission
The 7th Pay Commission was constituted in February 2014. Its recommendations came into effect from January 1, 2016. Generally, the recommendations of a pay commission are implemented every 10 years. The government had earlier stated that, following this tradition, the recommendations of the 8th Central Pay Commission are also expected to take effect from January 1, 2026.
Dearness Allowance (DA) is given to employees to compensate for the erosion in the real value of their salaries due to inflation. The DA rate is revised periodically every six months based on inflation data.
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