Railways is reportedly implementing cost-cutting initiatives across maintenance, procurement and energy sectors to fortify its financial position before dealing with increased wage expenses anticipated from the Eighth Pay Commission, The Times of India reported.
The 8th Central Pay Commission, established in January 2024, will review pay, allowances and pensions of central government employees.
It will examine and recommend changes in salaries and other benefits of central government employees.
The recommendations of the Commission, to be headed by former Supreme Court judge Ranjana Prakash Desi, are likely to be effective from January 1, 2026.
The commission's recommendations will cover nearly 50 lakh central government employees, including defence services personnel, and 69 lakh pensioners.
The commission will submit its report in 18 months and interim reports as and when they are finalised.
As per the TOI report, Indian Railways recorded an operating ratio (OR) of 98.90% in fiscal 2024-25, leading to net revenue of ₹1,341.31 crore.
For 2025-26, the target OR reportedly is 98.42%, with anticipated net revenue of ₹3041.31 crore.
Meanwhile, yearly payments to Indian Railway Finance Corporation (IRFC) are expected to decrease in fiscal 2027-28, as recent capital expenditure has been funded through gross budgetary support (GBS).
Officials confirmed to TOI that there are no plans for new short-term borrowing. "Annual freight earnings will also rise by ₹15,000 crore when higher wages need to be paid in 2027-28," an official was quoted as saying.
"Railways will ensure its finances are in a good condition to absorb the hit, Funds would not be an issued," the official reportedly said.
7th Pay Commission
The 7th Pay Commission was constituted in February 2014. Its recommendations were implemented from January 1, 2016.
Usually, recommendations of the pay commissions are implemented after a gap of every 10 years.
Going by this trend, the effect of the 8th Central Pay Commission recommendations would normally be expected from January 1, 2026, the government said in a statement earlier.
To compensate central government employees for erosion in the real value of their salaries on account of inflation, dearness allowance (DA) is paid to them, and the rate of DA is revised periodically every six months on the basis of the rate of inflation.
(With inputs from agencies)