New Delhi, March 4 -- In mid-January, the Centre announced the formation of the 8th Pay Commission to set future pay and allowances for central government employees.

The previous pay commission was formed in 2013, and its recommendations, impacting both defence and civilian personnel, came into effect in 2016. The new pay panel's recommendations are likely to take effect from 2026, and have implications on the Centre's finances and hiring.

Implementation of a pay panel's recommendations increases the cost pressure on the Centre's budget due to salary and pension.

The 7th Pay Commission, for instance, led to the share of salary and pension in the Centre's revenue expenditure jump by about 3 percentage points between 2015-16 and 2016-17,...