Ahmedabad ranked third in an Assocham survey that captured the dip in household savings thanks to inflation.
Amdavadis are spending less on eating out, mobile bills, impulsive shopping as well as vacations, as the saving rates of the average salaried person in major cities has come down by almost 45 per cent in the last six years. The Assocham survey reveals that savings rates in metros is down thanks to the exorbitant increases in prices of essential commodities, fuel, education, rise in health insurance premiua as well as the burden of home and car loans.
In the last six years, the salary of common man has gone up by 30 per cent but on the other side the discretionary spending has shrunk by 35 per cent.The survey highlighted that the per capita income of an average Indian estimated about Rs 46,000 per annum in 2009-10 went up by about Rs 8,000 in 2010-11, amounting to Rs 54,000 per annum. However, the survey adds that the rise in inflation and per capita income was disproportionate. The survey was conducted in a period of January to March 2011 in major places like Delhi, Mumbai, Ahmedabad, Chandigarh, Chennai, Hyderabd, Pune, Kolkata and Dehradun. Delhi ranks first in slowdown of household saving followed by Mumbai and Ahemdabad.
Nearly 58 per cent of the respondents in Ahmedabad said that they had cut back on protein intake like eggs, have switched to a coarser rice that costs less, consumes less cooking oil. People have also started using less washing powder for utensils and for clothes, while cutting down on spending on cosmetic items. Even after this, they are finding it difficult to save.
Secretary general of Assocham, D S Rawat said, “In an average salaries structure of Rs 40,000 per month, the amount available for discretionary spending is not more than Rs 17,000 as average employee shells out over Rs 6,000-8,000 on housing loan or rent, 5,000 loan on cars and two wheelers, and Rs 7,000-10,000 on education cost and FMCG . The share of Insurance premia including health insurance is over Rs 3000-5000.”
Around 70 per cent respondents from Ahmedabad said that they cannot afford to skip the premium insurance cannot as the policy cover will then cease to exist. The current scenario is to borrow money or cut down the costs but continue paying one's insurance policy premium.
Most Amdavadis, however, are prudent when it comes to borrowing. Around 42 per cent Ahemdabad respondents said that they borrow within their means and manage to pay their monthly loan installments which comes to around 40-50 per cent of their incomes. Even they are hit by rising interest rates, that leave them with no choice but to cut down on expenditure on lifestyle items when the equal monthly installments (EMIs) rise.