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New Delhi: The impact of the 8th Pay Commission will be seen not only on the pockets of government employees, but also on the Indian stock market. According to a JPMorgan report, this commission will increase the salary and allowances, which will increase both the income and spending capacity of households. High expenditure means more consumption and this consumption can also increase the earnings of companies. The report said that this increase in salary will also be one of the main reasons that determine the direction of the market in the coming years.
JPMorgan has stated in its report that the 8th Pay Commission can lead to a sharp increase in consumption. This consumption will strengthen the earnings of companies and institutional investment may also increase. That is, if the pockets of government employees are filled, then new life can also come in the market.
The entire effect of increasing consumption will depend on the fitment factor, which is the basic standard of salary revision. The Commission will take opinions from several departments and organizations to decide this factor. The report states that it will depend on how fast the salary hike will be.
DA's account may change the whole picture
This time the dearness allowance is 58 percent and it is expected that at the time of implementation of the Commission, it can rise above 65 percent. This is why real salary growth can be high even if there is a low fitment factor. That means employees may be likely to get more benefits from the previous commission.
Which sector benefits from increasing consumption
According to JPMorgan, with the implementation of the Commission, it will cost the government from Rs 3.7 to 3.9 lakh crore. This money will become a big base of consumption in the economy, especially in automobiles, consumer durable and affordable housing projects. Its more impact is likely to be seen in tier two and tier three cities where government employees live in large numbers.
What does it mean for employees and investors
More than one crore central employees and pensioners can be benefited from this commission. Due to the increase in salary, the markets may rise and the income of companies can improve. Investors can keep an eye on the consumption-based sector as it can become the basis for the next boom.
(Disclaimer: This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, gold, silver and crypto assets.)
