Two major decisions were taken in the Union Cabinet meeting held today under the chairmanship of Prime Minister Narendra Modi. First, the Terms of Reference of the 8th Central Pay Commission were approved and second, Nutrient Based Subsidy rates on Phosphatic and Potassic (P&K) fertilizers were approved for Rabi 2025-26.
Let us tell you that the decision of the Eighth Pay Commission will affect approximately 50 lakh central employees and 69 lakh pensioners. The commission will be headed by former Justice Ranjan Prakash Desai, while Prof. of IIM Bangalore. Pulak Ghosh will be the part-time member and Petroleum Secretary Pankaj Jain will be the member-secretary. The commission is to submit its recommendations in 18 months and the interim report is expected to be implemented by January 2026
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Under the second decision, the budgetary provision for fertilizer subsidy for Rabi season 2025-26 has been kept at about ₹37,952 crore, which is ₹736 crore more than that for the Kharif season. The government has announced to ensure that fertilizers like DAP, NPKS are available to farmers at affordable and subsidized rates.
If seen, when Bihar Assembly elections are in their decisive phase, then the political meaning of these two economic decisions of Modi government is clear. These steps are not only part of economic management but also address the politics of strategic balancing of social classes. The formation of the Eighth Pay Commission and the announcement of its terms of reference come at a time when the Central Government is in the second year of its third term and the morale of the personnel working in the administrative structure could be politically decisive. Let us tell you that the central employee class – especially lakhs of employees working in departments like Railways, Defense Establishment and Postal Department – were expecting some relief from the government for a long time regarding inflation and pay inequality.
This decision of the Cabinet sends a message to the middle class voter who has traditionally supported the BJP but is also facing dissatisfaction with the rising cost of living and tax burden in recent years. With the announcement of the Pay Commission, the government is indicating that it is conscious of the interests of the “stable income group”. Although its financial impact will not be less, it may put a huge burden on the exchequer of the Center and the states. Nevertheless, this decision can be seen as a political investment where “public satisfaction” has been given priority over “fiscal discipline”.
The second major decision i.e. fertilizer subsidy for Rabi season is directly related to the farmer voter class. In states like Bihar and eastern Uttar Pradesh, where small farmers and agricultural laborers play a crucial role, the message that the central government is active in keeping agricultural costs under control can be very effective. This provision of subsidy on phosphatic and potassic fertilizers is not just a price control but a political effort to stop the agricultural input crisis. The prices of raw materials have increased in the international market and in such a situation, giving relief to farmers is a strategy to reduce rural dissatisfaction.
This decision is especially important because Bihar has a large number of voters dependent on both agricultural income and employment. Delivering the message of “farmer-friendly” government to this class can prove to be politically beneficial for the BJP-JDU alliance.
If seen, both these announcements are two ends of political messages amid Bihar Assembly elections. On one side there are urban and middle class employees and on the other side there are rural farmers and agricultural class. The Modi government has tried to address both these sections simultaneously. If we look at the context of Bihar, there are about four lakh central employees and lakhs of pensioners in the state, whose influence along with their families reaches at least 15–20 lakh voters. On the other hand, the decision on fertilizer subsidy directly impacts the pockets of farmers and agricultural labourers. The objective of BJP is clearly visible from both these decisions – “message of relief amid inflation”, and “demonstrating the sensitivity of the Centre”. That is, the politics of development is now being linked to the politics of economic relief and trust.
However, these announcements are not the result of any sudden administrative decision amid Bihar elections; These are part of signaling economic politics. On the one hand, the Modi government wants to ensure “administrative cooperation” by giving relief to the bureaucracy and the middle class, and on the other hand, it wants to strengthen “rural trust” through subsidies to farmers.