Lakhs of central employees of the country are waiting for the 8th Pay Commission. It has been more than a year since the formation of the commission and now the commission is expected to submit its report after a few months. Under the Eighth Pay Commission, the salary of the employees will not only increase, arrears will also be added from January 2026. This means that bumper money is going to come to the employees. Obviously, if big money comes, the employees will spend it freely. As had happened during the implementation of previous pay commissions also.
So brother, the matter is clear. The benefit of the Eighth Pay Commission cannot be limited to just increasing the salaries of government employees. This may also bring changes in the way of shopping and spending in the country.
Nilesh Shah, Managing Director, Kotak Mahindra AMC believes that The demand for premium products may increase after the Pay Commission recommendations are implemented and employees receive arrears. Sectors like automobile, banking, travel, tourism and consumer durables can benefit from this.
According to Nilesh Shah, about 2 crore government employees and pensioners, including personnel of the Army, paramilitary forces and ministries, can get the benefit of increased salary and arrears as per the recommendations of the Pay Commission. This will increase their ability to spend as well as invest.
In an interview to NDTV Profit, Shah said that automobile, alcoholic beverage, travel, tourism and consumer durable sectors had performed well during the sixth and seventh pay commissions. That means there was good purchasing in these sectors. He believes that the same trend may continue during the Eighth Pay Commission, but this time the share of premium products in purchases will increase.
From Maruti 800 to Zen and WagonR, now the turn of SUVs!
Nilesh Shah has made an interesting comparison between the previous round of Pay Commission and the purchase of cars. According to him, there was a period of demand for cars like Maruti 800 during the Sixth Pay Commission. At the time of the Seventh Pay Commission, people’s inclination towards cars like Zen and WagonR increased. Now the demand for SUVs may increase during the Eighth Pay Commission.
He said, ‘If the Sixth Pay Commission was the era of Maruti 800, then the Seventh Pay Commission was the era of Zen and WagonR. The 8th Pay Commission could be the era of SUVs.
This comparison means that as the income of employees increases, their preferences may also change. Whereas earlier people used to give preference to economical cars, now the demand for higher priced vehicles with better features is likely to increase.
Big money will come into the hands of employees and pensioners
Employees and pensioners are expected to benefit from the recommendations of the Eighth Pay Commission. Apart from the increase in salary, a lump sum amount can also be received in the form of arrears. Employees can use this additional amount in many ways.
- Cars and other vehicles: Purchase of SUVs and premium cars may increase.
- Travel and Tourism: Expenditures may increase on holidays and travelling.
- Consumer Durable: Demand for TV, fridge, AC and other expensive household items may increase.
- Banking and Investment: Some part of the additional income can go into savings and investments.
According to Nilesh Shah, premium consumption and banking sector can be important themes for investment in the medium term. At the same time, he has seen modern manufacturing as a long-term investment opportunity.
When will purchasing in the market increase?
How much the economy will benefit from the Eighth Pay Commission will depend on when its recommendations are implemented and when the employees get the increased salary and arrears.
The government had announced the formation of the Eighth Central Pay Commission in January 2025. The commission has to submit its recommendations within 18 months from the date of formation. However, the government has not yet announced the date or full schedule for implementing the recommendations.
Brokerage firm Jefferies, in its recent report, has also described the Pay Commission as a possible support for discretionary consumption i.e. non-essential and optional expenses in the financial year 2027-28 (FY28). According to the report, increased salary and accumulated arrears can increase the spending capacity of families.
Jefferies also said that better revenue growth of companies in the financial year 2026-27 can boost employment and consumption. However, risks like weak monsoon and reduced impact of GST relief also remain.
Keep an eye on these sectors from investment point of view?
According to Nilesh Shah, the theme of premium consumption can be strengthened by the Eighth Pay Commission. Apart from this, banking and financial services sector should also be kept an eye on. At the same time, modern manufacturing can be seen as a long-term investment opportunity. However, how much benefit these sectors will get from the Pay Commission will depend on the implementation of the recommendations, payment of arrears and the spending decisions of the employees.
According to Shah, the Eighth Pay Commission can not only increase the income of government employees but can also affect the consumption in the country. The only difference will be that this time the shopping trend may not be limited to just buying more goods but may move towards expensive and premium products.
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Source: ndtv.in
