The Pay Commission is the body that decides how much India’s central government employees earn. First set up in 1946, it is usually formed every ten years under the Finance Ministry’s Department of Expenditure. Since Independence, seven commissions have been created, with the latest being the 7th Pay Commission in 2014, whose recommendations took effect in 2016.

The Commission’s job is to review pay scales, allowances, and pensions in line with inflation, cost of living, and economic conditions. Its recommendations carry weight not just for central employees but also for state governments and even private companies that use them as benchmarks.

The 7th Pay Commission set minimum pay at ₹18,000 per month and maximum at ₹2.5 lakh for the Cabinet Secretary. It introduced a transparent pay matrix in place of grade pay, retained 3% annual increments, and strengthened the New Pension System’s grievance redressal. Dearness Allowance (DA), linked to inflation, continues to be revised based on consumer price indices.

However, pay revisions create challenges. They put pressure on public finances, raise debates over income disparities, and test the government’s ability to balance fairness with fiscal discipline. Despite this, Pay Commissions remain vital for employee motivation and equity.