The implementation of the Seventh Pay Commission recommendations this year is going to bring cheer to various segments and one of the biggest beneficiaries is expected to be real estate.
About Rs.1 lakh crore of money is being released as part of the hike in salaries and an additional amount would be paid as arrears (retrospective effect). All this money would be in the hands of those who are working for various departments of the Central government.
Defence personnel and pensioners too would benefit from this outflow from government coffers. Needless to mention that this will be the money in the hands of over 30 lakh people, to be spent and to be invested in various ways.
While consumption is expected to be high on holidays, clothing, gadgets, buying cars and such other extravaganzas, people are also expected to invest in property including renovating their existing houses.
Expectations
The real estate sector, banks and home finance institutions (HFIs) are quite enthralled at this prospect.
The most guilt-free investment when one receives a windfall income is to invest in immovable assets and real estate stands tall compared to other opportunities.
SBI offer
Taking the cue, State Bank of India has already thrown the hat into the ring by announcing cheaper home loans exclusively for central government employees, hoping that people would start investing in properties and/or renovate their existing houses. It would be interesting to see if the offer would work in favour of India’s largest public sector bank.
Going by the past experiences of such pay revisions (Sixth Pay Commission was awarded about eight years ago) people have indeed invested a good portion of such largesse received in property and the real estate and banking sectors expect an encore.
It is advised that those who are the beneficiaries of such income should first consider saving/investing in good asset classes and then spend.
Close loans
It would also be a good idea if one can terminate any long-term loans or even reduce the loan burden which will again put more money in the pocket by way of lessened EMI outflow.
Prudent money management is the key.
[Source:-The Hindu]
