The Pay Commission is a committee constituted by the Government of India decennially, responsible for tabling recommendations regarding changes in the salary structure of federal employees, both civilian and defence.
[3] The mandate of the First Pay Commission was to examine and recommend emolument structure of the government's civilian employees.
[7] Constituted in June 1983, its report was presented in three phases within four years and the financial burden to the government totalled ₹1282 crore.
The notification for the establishment of the Fifth Pay Commission was issued on 9 April 1994, but it became operational only on 2 May 1994, with the assumption of charge by the Member Secretary.
It also recommended the reduction of the number of pay scales from 51 to 34 and to not initiate recruitment of personnel for around 350,000 vacant positions in the Central Government.
[11] However, the foregoing recommendations of the Fifth Pay Commission were largely ignored by the subsequent Janata Dal (United Front) and BJP government led by Atal Bihari Vajpayee.
Journalistic reports had speculated that the additional cost of salary hikes under the Sixth Pay Commission would be around ₹20,000 crore for 5.5 million government employees.
The demand for hikes was driven by factors such as rising inflation and the growing wages in the private sector due to the forces of globalisation.
[13] On 29 June 2016, the Union Cabinet approved the Seventh Pay Commission’s recommendations, which were to be implemented from 1 January 2016.
[citation needed] Unlike previous pay commissions, the arrears were to be paid within the same financial year (2016-17).
Employees can borrow up to 34 months of their basic pay, with a cap of ₹25 lakh, the cost of the house or flat, or an amount based on their repayment capacity—whichever is the lowest.
If both spouses are central government employees, they can apply for the Housing Building Advance (HBA) either jointly or separately.
In May 2014, a group of retired government officials challenged the inclusion of a senior IAS officer in the three-member Seventh Pay Commission in the Delhi High Court.
They argued that this could result in an inherent bias in the commission's recommendations, favouring IAS officers over other government employees.
[citation needed] In March 2016, eighteen former heads of the Armed Forces, including General Ved Prakash Malik (former Chief of Army Staff) and Admiral Arun Prakash (former Chief of Naval Staff), sent a joint letter to Prime Minister Narendra Modi expressing their concerns over the recommendations of the Seventh Pay Commission.
[citation needed] On 16 January 2025, the Minister of Railways Ashwini Vaishnav announced the constitution of the Eighth Pay Commission.