Budget 2024: 48% homes face a fall in earnings & savings, says survey

Nearly 48 per cent of Indian homes say they are increasingly experiencing a fall in earning and saving, according to a survey by the research agency LocalCircles, adding that rising costs of living are outstripping the rate of growth in income.

PRICES RISE & INCOME FALLS

Middle-class households that participated in the survey, conducted in the runup to the Union Budget on July 23, spoke of how price rise has become a problem in every sphere of life, from food to education and transport, and from rent to electricity bills.

Most respondents mention how they were forced to draw from savings, take loans or sell property to meet expenses, given the stagnating or declining income in workplaces.

While 48 per cent of respondents feel their annual household income would witness a drop in the fiscal year 2024-’25, or FY25, compared to the past financial year (2023-’24, or FY24), another 48 per cent said saving would decline in the same period year-on-year.

Around 15 per cent homes expect that the drop in household saving would be more than 25 per cent in FY25, and 7 per cent feel the decline in household earning will exceed 25 per cent in the same period, compared to the past year.

POST-COVID PRESSURE

Following Covid-19, saving in most Indian households have steadily been on the decline from its peak figure of Rs 23.29 lakh crore in the fiscal year 2020-’21, or FY21. The numbers fell to Rs 17.12 lakh crore in 2021-’22 (FY22) and Rs 14.16 lakh crore in 2022-’23 (FY23).

India’s household savings rate is estimated to have declined from 22.7 per cent of GDP in FY21 to 18.4% in FY23, data from National Account Statistics that has been released this year by the Ministry of Statistics and Programme Implementation(MoSPI) says. Net household saving in India fell by Rs 9 lakh crore to Rs 14.16 lakh crore in FY23, over a period of three years.

On an average, gross financial assets stood at around 10.8 per cent year-on-year over the past decade, substantially lower than the growth rate of financial liabilities, at 16.1 per cent year-on-year. There was a notable drop in net financial assets in FY23, when financial liabilities shot up by 76 per cent year-on-year.

SURVEY DETAILS

Around 21,000 people in 327 districts of India participated in the survey, where 67 per cent respondents were male and 33 per cent female. Respondents from Tier-1 cities comprised 44 per cent participants, 32 per cent belonged to from Tier-2 cities, and 24 per cent were from cities that belong to Tiers 3 and 4 categories, besides rural India.