The rollout of the 8th Pay Panel in FY28 is likely to weigh heavily on the country’s finances, with the combined payout for the Centre and states expected to exceed ₹4 lakh crore, Member of the Prime Minister’s Economic Advisory Council (EAC-PM) Neelkanth Mishra said on Wednesday. Adding five quarters of arrears could lift the overall burden to around ₹9 lakh crore, he added.
“The government may also keep in mind that in FY28 there will be the Pay Commission. And the Pay Commission at the general government level will be ₹4 lakh crore plus; there will be five quarters of arrears, so that’s like a ₹9 lakh crore burden,” Mishra noted.
Given the commitment to a debt-to-GDP target, Mishra cautioned that the added fiscal pressure will require careful policy adjustments. “Given there is a debt-to-GDP target, maybe some of the heavy lifting will have to be done… it’s a tricky task, but I am endorsing the desire to maintain fiscal stability,” he said.
Noting that India has been an outlier in fiscal consolidation, he cautioned that multi-year low inflation indicates “there is a lot of slack in the economy.” Combined with the rollout of the Pay Commission in FY28, India may not be in a position to adopt a very aggressive fiscal consolidation path.
India will switch to a five-year debt-GDP fiscal roadmap from FY27, with the Finance Minister expected to outline the glide path in the upcoming Union Budget.
Neelkanth Mishra made these remarks at the CII IndiaEdge 2025 Summit in New Delhi.
(Edited by : Sheersh Kapoor)
