What is the Effect of 7th pay Commission on Real Sector

The Seventh pay commission

The Indian Union Cabinet finally approved the long-debated topic, Seventh Pay Commission recommendations on June 29, 2016. This move by the government will directly benefit approximately 50 lakh employees working as staff and about 58 lakh pensioners throughout the country. The impact of this move can just be derived from the fact that many officials working at senior level positions in various government departments will now draw salaries higher than even the Members of Parliament. This move will clearly generate good momentum for Indian economy which is already growing at the rate of 7.5%. It will also have a direct impact on consumption demand in many urban areas of India due to increasing income levels.

The approval for 7th Pay Commission definitely comes as good news for real estate sector. But before, we discuss more on this, let us have a quick look at

Major recommendations laid by the Seventh Pay Commission:

  • 7th Pay Commission recommended about 23.55% of the increase in pension, salaries as well as allowances.
  • It will put a load of INR 1.02 Lac crore on Indian government or in another term 0.7% of the total GDP
  • The panel recommended 14.27% of an increase in basic pay which is the lowest in last 70 years.
  • The cabinet, however, approved 20% minimum pay hike with a maximum limit of 25%.
  • In a bid to bring in transparency, the Pay Commission report has recommended changing of the current system of grade pay and pay bands with new pay matrix.

Having gone through highlights of 7th Pay Commission let us now discuss that how this declaration will impact real estate growth in the country. Realty experts share an opinion that it will inject real estate with needed boost and energy as middle-class government employees will get more income thus leading to the creation of more disposable income. In India, it is common notion that whenever salary of any individual in increased, he/she gets concerned about saving. But let us not go by notions here and stick to the insights given by experts.

What is its impact on major cities

As can easily be predicted after the clearing of 7th Pay Commission the major impact will be seen in urban areas of the country which include places like Noida, Ghaziabad, Mumbai, Bengaluru, Chennai, Pune, Hyderabad, Ahmedabad and many more. The regions of Chennai have many housing options available for homebuyers. These range from affordable 2BHK and 3BHK apartments in various parts of Chennai.
One such upcoming project is Shriram Code Superstar located in the region of Perungalathur in Chennai. The project is a part of the Shriram Properties, the real estate developers and builders committed to providing quality and affordable residential and commercial properties at some of the prime locations of India. The project offers three different housing options to the buyers 1, 2 and 3 BHK apartments. The build-up area ranges from 642-1954 sq. ft and the cost of the apartment range between INR 26.96 – 82.06 lakhs. Apart from the approval of 7th pay, the various amenities required for a luxurious living is also provided which plays an important role to opt for this project.

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