-Bruhaspati Samal-
The Government of India, which had verbally announced the constitution of the 8th Central Pay Commission (CPC) on 16th January 2025 ahead of the Delhi elections, finally formalised it through a Press Release on 28th October 2025 with Cabinet approval, and the Gazette Notification was issued on 3rd November 2025—just a few days before the Bihar Assembly election and several by-elections across the country. The announcement came wrapped in political timing, but its true implications lie buried within the Terms of Reference (ToR). Unlike its predecessors, the 8th CPC’s ToR place fiscal restraint at the heart of its mandate, revealing an agenda that seems to prioritise the government’s treasury over the welfare of its own employees and pensioners.
The 6th CPC, constituted in October 2006, carried no clause instructing the Commission to judge pay or pensions by the country’s economic conditions or fiscal prudence. Its purpose was straightforward—to review pay structures in light of changing cost of living and social expectations. The 7th CPC, notified on 28th October 2014, went further by including a progressive clause to “examine best global practices and their adaptability and relevance in Indian conditions.” This reflected an aspiration to align public service standards with international benchmarks. But the 8th CPC, notified on 3rd November 2025, replaced this forward-looking clause with two limiting ones: the need to consider “the economic conditions in the country and the need for fiscal prudence” and “the unfunded cost of non-contributory pension schemes.” The shift is clear—from global benchmarking to domestic belt-tightening.
This difference is not mere bureaucratic drafting—it is a philosophical departure. Earlier Commissions were guided by the principle of fairness, acknowledging that a well-paid, secure workforce forms the backbone of governance. The new ToR, however, subtly redefine the Commission’s purpose—to restrain rather than to reward, to calculate rather than to care. It transforms a welfare-oriented framework into a fiscal balancing act. By repeatedly invoking “economic conditions” and “prudence,” the government has effectively placed invisible handcuffs on the Commission’s independence.
Yet this invocation of prudence comes with striking irony. India today boasts record tax revenues, a steady decline in fiscal deficit, robust foreign exchange reserves, and ambitious infrastructure spending. The nation dreams of becoming a $5 trillion economy by 2028. If fiscal optimism can justify tax incentives to industries, loan write-offs to corporates, and large-scale capital outlays, why should “prudence” suddenly surface as a restraint when it concerns the very employees and pensioners who sustain the system? The paradox lies here—prudence becomes flexible for corporates but rigid for public servants.
The Finance Act 2025 intensifies this paradox. While the government presents it as an instrument of economic rationalisation, the Act quietly embeds provisions that discriminate between classes of pensioners based on their date of retirement. Those who retired before the implementation of the 8th CPC may be denied proportional revision, creating unequal classes among equals. This is not merely unfair; it violates the Supreme Court’s historic judgment in D.S. Nakara vs Union of India (17 December 1982), which declared pension to be a deferred wage and an inseparable right earned through long service. The Court had firmly ruled that all pensioners form a single class and cannot be discriminated against by arbitrary cut-off dates. Yet, through the Finance Act’s structure and the ToR’s fiscal pretext, the government appears to be sidestepping this constitutional guarantee.
The repeated reference in the ToR to “the unfunded cost of non-contributory pension schemes” clearly targets the Old Pension Scheme (OPS), which was discontinued for new recruits in January 2004 and substituted by the market-linked National Pension System (NPS). In April 2025, this system was renamed and extended as the Unified Pension Scheme (UPS), continuing the same contributory model. While OPS offered security through defined benefits, NPS and UPS expose employees to market fluctuations. By treating OPS as a fiscal burden, the government undermines its role as a social security guarantee for those who have devoted 35 to 40 years in public service. Pension, in a welfare democracy, is not charity—it is a moral and constitutional obligation.
India’s stance becomes more indefensible when viewed globally. The Mercer–CFA Institute Global Pension Index 2025 paints a grim picture—India scored just 43.8 out of 100, ranking among the lowest of 47 countries surveyed. In contrast, the Netherlands scored 84.8, Denmark 81.6, and Israel 78.3. These nations allocate between 7% and 11% of their GDP to pensions, ensuring adequacy and dignity for retirees. India, by comparison, spends less than 2% of GDP on pensions. The Index noted that India’s system suffers from low adequacy, poor sustainability, and weak integrity—three pillars of retirement security. Even smaller economies like Chile and Malaysia outperform India in providing dependable post-retirement income. The country that celebrates its growth story thus stands exposed for failing its own elders.
The government’s fiscal priorities underline this paradox even further. As per official data, corporate tax exemptions in 2023–24 alone amounted to over Rs. 1.37 lakh crore. Scheduled commercial banks wrote off Rs. 15.3 lakh crore of loans between 2014 and 2024. Subsidies and freebies like the free foodgrain scheme for 80 crore citizens cost nearly Rs. 2 lakh crore annually. In comparison, the projected additional cost of implementing the 8th CPC, including pay and pension revision, is around Rs. 1.2 lakh crore—barely 0.3% of GDP. The arithmetic of compassion thus appears distorted: billions can be spared for political populism or corporate comfort, but not for those who kept the nation’s wheels turning.
The moral question is unavoidable. Government employees are not liabilities—they are the nation’s administrators, teachers, postal workers, railwaymen, nurses, and clerks. Their collective labour has built modern India, often through decades of service in remote and harsh conditions. To call their pension “unfunded” is to deny the very premise of social justice that the Constitution enshrines. Article 41 of the Directive Principles mandates the state to provide public assistance in cases of old age and disablement. The D.S. Nakara judgment interpreted pension as a facet of that very constitutional promise. To undermine it under the excuse of prudence is to transform fiscal logic into social cruelty.
The government would therefore do well to heed the recommendations of the Staff Side of the National Council (JCM). The Council has suggested concrete measures: bringing Gramin Dak Sewaks under the purview of the CPC, redefining a family as five consumption units (instead of three) while calculating minimum wage under Dr. Akroyd’s formula, settling 7th CPC anomalies, ensuring five promotions during a career, merging unutilised pay scales, restoring the commutation period of pension from 15 to 12 years, revising pensions every five years as recommended by the Parliamentary Standing Committee, extending cashless treatment under CGHS to all employees and pensioners, deleting discriminatory provisions of the Finance Act 2025, granting interim relief, and revising the Dearness Allowance formula. These are not extravagant demands—they are fair corrections to systemic neglect.
At its core, the 8th CPC’s ToR represents a test of governance. Will the government treat its employees and pensioners as expendable costs or as the moral capital of the Republic? True fiscal prudence lies not in suppressing legitimate dues but in aligning budgets with social justice. Prudence that serves only power and profit is not prudence—it is paradox.
India cannot afford to repeat the error of viewing public servants as liabilities. They are the silent backbone of the state, the bridge between policy and people. Their pension is not an expense but a measure of civilisation. A nation that dreams of global greatness must first protect those who built its foundation. The Government must remember: economic growth without social gratitude is hollow. Prudence, if it means denying justice to employees and pensioners, ceases to be a virtue—it becomes betrayal. The 8th Central Pay Commission must, therefore, rise above the paradox of prudence and restore faith in the welfare promise of the Indian State. Only then will growth truly have meaning, and governance regain its moral soul.
*****
(The author is the General Secretary, Confederation of Central Govt. Employees and Workers as well as the President of Forum of Civil Pensioners’ Association, Odisha State Committee, Bhubaneswar and a columnist.)
0 Comments