Mistakes 8th Pay Commission must not repeat — Straight talk from a former CAPC Chief

Few officers in the Indian Army have seen the evolution of pay, status and service conditions for soldiers as closely as Lt Gen K. K. Aggarwal, AVSM, SM, VSM (Retd). A distinguished officer from the Corps of EME, he recently retired as the Director General of Electronics and Mechanical Engineering (DG EME). Earlier, as a Major General, he served as the Chairman of the Army Pay Commission Cell (CAPC) during the 7th Central Pay Commission—placing him at the heart of the complex negotiations, presentations and deliberations that shaped the current pay structure for India’s armed forces.

Having interacted directly with the Pay Commission, the Ministry of Defence and the highest levels of government during that period, Lt Gen Kapil Aggarwal brings a rare insider’s perspective on how decisions were made, why key anomalies persist, and what the 8th Pay Commission must correct.

In a candid conversation on the philosophy, politics and persistent challenges of India’s Pay Commission system – with Neeraj Mahajan, Editor, Taazakhabar News— Gen Aggarwal spells out what the serving and retired soldiers need or can expect to get in the years ahead.

Q. What was the purpose behind the Pay Commissions? And have they lived up to the expectations of government employees, especially the rank and file in the armed forces?

A. This is a very important question because many people, including some experts, don’t fully understand why Pay Commissions exist. The purpose of the pay commission was questioned in the 7th CPC report, which even hinted that if DA keeps rising to offset inflation, then perhaps future Pay Commissions may not be required. To me, that argument is fundamentally flawed.

DA is only meant to cushion inflation. It does not consider the fact that over a period of ten years, the GDP grows and national income rises. When that happens, central government employees—including the armed forces—are entitled to a fair share of that larger national cake. That is the first and most basic purpose of a Pay Commission: to align salaries with the country’s growing financial capacity and with the aspirations of employees in a changing economic environment.

The second purpose is to update the pay structure itself. Over ten years, government policies evolve, new organisational structures are created, and new responsibilities emerge. The remuneration framework must adapt to those realities.

The third purpose is to address anomalies. Every Pay Commission leaves behind a trail of distortions, some visible immediately, some that appear years later. Only a dedicated, expert body like a Pay Commission can step up after a decade and correct those accumulated irregularities.

Now, whether Pay Commissions have met expectations is a nuanced matter. They have certainly not satisfied everyone, and grievances will always remain. But the very fact that all central government employees look forward to each Pay Commission, shows that they do meet at least some expectations, and people still believe they are necessary.

Q. From the 3rd to the 7th Pay Commission, how were the armed forces represented? Is there a structural issue here?

A. There is a strong perception in the armed forces that they’ve been inadequately represented since the 3rd CPC. Having personally observed the functioning of the 7th CPC and the Ministry of Defence, I would say the real problem is more conceptual than structural.

People often quote “civilian control of the military” without understanding what it means. Civilian control in a democracy is supposed to be political control, exercised by elected representatives. But over time, it has morphed into bureaucratic control, which was never the intention. This alone changes the entire dynamic of how military issues—including pay and status—are examined.

There is also the growing influence of the IAS and civil services over almost every aspect of governance. Despite attempts by the present government to introduce lateral entry, the chokehold of the bureaucracy remains strong. The military’s apolitical character, which should be a virtue, becomes a handicap in a system where civilian officials can leverage proximity to political masters to advance institutional interests. That creates envy, friction and an inherent bias.

Against this backdrop, demanding a full-fledged defence member on the Pay Commission becomes unrealistic. The Commission today comprises a Chairperson and just one member. If you add a Defence representative, every major stakeholder—from Railways to Paramilitary forces—will demand one too. The government will never agree to that. And in any case, Pay Commissions already interact extensively with defence stakeholders. So, the issue is not the absence of a uniformed member; it is the conceptual framework within which the system operates.

Q. Many in the services believe Pay Commissions consistently favour the IAS and civil services. How did this imbalance get institutionalised?

A. If you look at it historically, the imbalance got cemented gradually through changes in status, pay structures and allowances.

Let’s talk about status first. After Independence, defence and IAS officers had roughly comparable status at entry, mid-career and senior levels. The career trajectories were different, but the broad parity existed. The 3rd CPC in 1973 formally altered that balance. A Lieutenant Colonel was no longer considered equivalent to a Selection Grade Director. Colonels and Brigadiers were shifted one rung lower than their earlier civilian peers. And the downward movement didn’t stop there. After the 6th CPC, Lieutenant Colonels and Brigadiers were placed in lower grade pays of Rs 8000 and Rs 8900, which pushed them even further down the equivalence ladder.

On pay, the 3rd CPC gave defence officers a 7 percent edge at the entry level. The 4th CPC reduced it to just about 3 percent. And with the shift to pay bands and then to the 7th CPC’s pay matrix, even that small edge disappeared. Today, entry-level salaries for IAS and defence officers are the same.

Allowances further deepened the imbalance. There have been many cases where civil servants posted in what are considered “hardship” areas in the Northeast or J&K were drawing higher allowances than armed forces personnel operating in far harsher environments. There was a time when even Siachen allowance—which represents the highest level of hardship and risk—was lower than the allowances being paid to civil servants in state capitals like Guwahati and Shillong. That sort of disparity naturally fuels the perception that the system is skewed.

Q. Why do many soldiers believe they’ve been treated as second-class stakeholders?

A. I would personally avoid using the phrase “second-class,” but I completely understand why many feel that way. The pattern of repeated downgrades is very real.

You see it in status, where defence ranks have been placed below their earlier civilian equivalents. You see it in the denial of NFU, which every major civil service has received, including services that fall under the Ministry of Defence. You see it in the number of senior-grade posts. In the Army, only about 0.4 percent of the officer cadre is in HAG and above. In contrast, around 10 percent of the IFS and about 7.5 percent of the IRS are in those grades. Even the IDAS—which works under the MoD—has around 4 percent of its cadre in HAG and above. These differences send a very clear message.

Then there is the matter of allowances. A Joint Secretary posted in Guwahati or Gangtok may draw around Rs 25,000 as Special Duty Allowance. A Major General posted in the same city gets much less, even where the role is active or semi-active. And in very active field areas, the field allowance rises only to about Rs 16,900. Such disparities cannot be ignored.

Finally, the training period for civil servants counts towards their pensionable service, while defence officers’ training does not. Their reckonable service starts only after commissioning. All these factors build up over time and affect morale, command relationships and the overall sense of fairness.

Q. Military Service Pay was introduced to compensate for risk, yet it created new anomalies. How should the 8th Pay Commission address this?

A. MSP was meant to compensate for the intangible hardships of military service. But when Major Generals and above were denied MSP, it created a situation where Colonels and Brigadiers started drawing higher pay and pension than Army Commanders or even the Vice Chief. That is fundamentally unsustainable.

The Services, along with MoD and MoF, had worked out a corrective solution, but the Government never issued the orders. Eventually, only after the Punjab and Haryana High Court intervened did the government partially fix the pension disparity, leaving the pay structure still unresolved.

The 8th CPC must take a fresh look at MSP and remove this anomaly once and for all by granting MSP to General officers. This is where mathematical modelling and even AI-based anomaly detection can be extremely useful. If used properly, they can prevent exactly the kind of distortions that we have been living with since the 6th CPC.

Q. Should the armed forces have a permanent representative in the Pay Commission?

A. I believe insisting on a full-fledged member from defence is a futile exercise. The government will never accept it because it immediately sets off demands from every other stakeholder.

Instead, what the Services should demand is something entirely practical: defence officers should be posted as part of the Central Staffing Scheme and assigned to the Pay Commission’s supporting staff. These supporting officers are the ones who run the analysis, prepare drafts and shape the options placed before the Commission. The Chairperson mainly adjudicates between those options.

After the 7th CPC, my recommendation was to set up a separate, staggered Defence Pay Commission about six months after the Central Pay Commission submits its report. Because every Pay Commission creates its own structure—whether integrated scales, pay bands or pay matrix—it makes sense to have a Defence Pay Commission that can fit the military’s pay and pension structure into whatever overarching framework the main Commission has recommended.

Q. Some bureaucratic voices claim that granting NFFU to the armed forces will disturb hierarchy. How do you view this argument?

A. To be honest, that argument reflects a misunderstanding of how NFFU works. NFFU does not give anyone a promotion. It only gives a Grade Pay / Level upgrade after a few years (for civil officers linked to promotions of corresponding IAS batch) and that too only if the officer is already holding the present rank (level) in substantive capacity.

So, a Lieutenant Colonel or Colonel will never receive the pay level of a Major General through NFFU. The chain of command and rank hierarchy remain the same.

The Service Chiefs themselves strongly recommended grant of NFFU to defence officers to the 7^th CPC as well as Government. If anyone understands the impact on hierarchy, it is the Chiefs—not bureaucrats sitting in Delhi.

And let me give a practical example. Because of MSP distortions introduced by the 6th CPC, Colonels and Brigadiers have been drawing higher pay and pension than some General Officers for more than a decade. Has the hierarchy collapsed? Has command and control suffered? Not at all. So, if that larger distortion didn’t damage hierarchy, NFFU won’t.

Even the Chairperson of the 7th CPC recommended NFFU for defence officers. The sole member, Mr Vivek Rae, stated openly that if anyone deserves NFFU, it is the armed forces first. The fact that the government denied it and then appealed against AFT rulings has no sound justification.

Q. OROP was seen as a milestone, but its implementation became contentious. What should the 8th Pay Commission learn from this?

A. OROP was granted in September 2015, a couple of months before the 7th CPC submitted its report, so the Commission had no direct role in its design. But the 8th CPC can certainly examine the anomalies that have emerged and make recommendations.

More broadly, every Pay Commission award has generated anomalies—some immediate, some emerging years later. The real lesson is that the 8th CPC must have strong financial and mathematical expertise. If necessary, they should use AI tools to simulate long-term effects. Without that, new anomalies will again creep in and continue the cycle of grievances.

Q. Warfare is changing—cyber, drones, space, cognitive warfare. Should pay structures and career progression reflect these new skill requirements?

A. Absolutely. The battlefield of the future will be technology-driven. Soldiers and officers will need continuous reskilling in areas like cyber security, AI, drone warfare and electronic operations.

The current system gives qualification pay or allowances for certain degrees. This need updating. The allowances must be enhanced meaningfully, and the list of eligible qualifications should expand to include modern technological skills. This should apply not just to officers but also to JCOs and ORs based on curated sets of courses.

For promotions, the Services already award weightages for certain qualifications. That list needs to be updated to reflect emerging domains. And the MACP system for OR can be reviewed by the 8th CPC in consultation with the Services.

As for pensions, skill-linked allowances should remain payable only during service. They should not carry over into pension, because they are contingent on applying the skill while in uniform.

Q. What are soldiers expecting from the 8th Pay Commission? And what message would you like to convey to policymakers?

A. Soldiers expect fairness, empathy and a genuine effort to understand their lived realities. The members of the 8th CPC must visit forward areas, high-altitude stations and remote units so they can witness first-hand the conditions under which soldiers live and work. Without that exposure, the intangible hardships of military service are impossible to appreciate.

They also expect the Pay Commission to rise above personal prejudices and institutional loyalties. Unfortunately, that hasn’t always been the case in earlier Commissions. And they expect long-pending anomalies—some going back decades—to be addressed decisively.

My message to policymakers is simple: please don’t subject defence personnel to bureaucratic loops. After the 6th CPC, anomalies bounced from the Service Chiefs to the Raksha Mantri, then to the Prime Minister, then to a Committee of Secretaries, then back to the Ministry of Defence, then to the 7th CPC, and finally back again to the Ministry of Defence—where they were shelved. Years passed and nothing changed. This merry-go-round must stop. Soldiers deserve clarity, honesty and timely resolution—nothing more, nothing less.

Q. What was your experience with the 7th Pay Commission?

A. I was part of the Services set-up for the 7th CPC, not the Commission itself. Our role was to provide inputs, formulate proposals, make presentations, brief the Commission, coordinate their visits to forward areas and give them whatever data they required. On that front, the interaction was smooth and professional.

However, if you read the 7th CPC report carefully, you can clearly see where the Commission erred and why voice of dissent was evident in its report itself. The Commission itself does not appear to have been unanimous on some key recommendations, and their prejudices and linkages, I dare say, are visible between the lines.

Q. One final question. There have been apprehensions that the government was not very keen on having an 8th Pay Commission, and that this practice might be discontinued in future. Would that be a good decision?

A. The 7th CPC report more or less says that there may not be any need for future Pay Commissions. The logic given is that inflation is already neutralised through DA, so why have another Commission.

Frankly, I was aghast at that reasoning. It completely ignores everything we discussed earlier about GDP growth, rising national income and the need to periodically realign pay structures with organisational changes, not just DA. Recommendations like that only confirm what I keep saying; you need strong financial and mathematical expertise on a Pay Commission. When the chair is a legal expert with no deep financial background, there is a real risk that the fundamental purpose of a Pay Commission—why you need one every ten years or so—is simply not understood.