8TH CENTRAL PAY COMMISSION

NEWS

• A Pay Commission is constituted by the Central government to review and recommend changes in the salary structure, pensions, and service conditions of Central government employees and defence personnel.
• It functions through an executive order based on Cabinet approval.
• The first Central Pay Commission (CPC) was set up in 1946(under the chairmanship of Srinivasa Varadachariar).
• The 8th CPC, chaired by Justice Ranjana Prakash Desai, with Prof. Pulak Ghosh and Pankaj Jain (IAS) as members, has 18 months to submit its report.

HIGHLIGHTS

Terms of Reference (TOR)

• TORs are framed by the Union Cabinet and direct the CPC to consider:
  • The economic and fiscal conditions of the country.
  • Resources for welfare and development expenditure.
  • Impact on State finances, since many adopt CPC recommendations.
  • Pension liabilities and comparisons with private and public sectors.
• The 7th CPC had fixed the salary compression ratio (lowest to highest pay) at 1:12.5.

Evolution of Public Sector Compensation

• 1940s–1970s: Focused on equity, aligning with private sector benchmarks.
• 1980s: Shifted towards efficiency and performance-based evaluation.
• 1990s–Present: Emphasized incentives, skills, and affordability.
• Modern systems aim to recruit and retain talent while containing fiscal costs.

Global and Indian Perspectives

• Internationally, fair public compensation emphasizes equity, competitiveness, clarity, and talent attraction.
• India maintains internal equity but lags in external competitiveness, especially at top levels.

Challenges and the Road Ahead

• The 8th CPC must revisit top-level pay structures and specialist roles to attract skilled professionals.
• It should also factor in training, flexible work, and well-being—currently outside TOR.
• With a pension bill of ₹2.76 lakh crore, fiscal prudence remains crucial while ensuring fair and motivating pay scales.