Sunanda K Datta Ray: Living beyond their means

WHERE MONEY TALKS

The envelope delivered by Royal Mail "" this is being written in London "" was marked PRIVATE. But since it was from a financial company and addressed to my son who is a student and has no means of his own, I felt justified in opening it.

I am glad I did for the letter inside described in glowing terms how he had "been pre-selected to apply for" a credit card "with a great low rate of 0 per cent interest" and a limit of £4,000. A beautiful dummy card was attached.

Such enticing tactics help to explain the British National Consumer Council's revelation that British families are in the same plight as the incomparable wit and writer, Oscar Wilde.

The story is that when a friend poured some drops of champagne down Wilde's throat as he lay destitute and at death's door in Paris, he murmured famously, "I am dying beyond my means".

There is a warning for India's burgeoning economy even in that apocryphal tale. True, credit cards are only a marvellous modern version of our ancient hundi or promissory note which was honoured far and wide and through which merchants and maharajahs could transfer sums of money.

The purpose of both instruments is to spare people the bother and risk of carrying cash. But, more and more, credit cards are becoming an invitation to disaster in the hands of the imprudent.

It has to be clarified that the major card-issuing companies do not practise unscupulous hard sell, but the banks that operate them often do. There are also many mushroom institutions like the one that approached my son that create the illusion of easy credit. They might yet force a repetition of the South Sea Bubble.

India did not have to worry about such problems before banks and car manufacturers took to persuasive telephone salesmanship. Paradoxically, national prosperity increases the danger of individual bankruptcy caused by a profligate proliferation of plastic money. This is the latest British malaise.

Not that there is much visual evidence amidst the hustle and bustle of London, ranked as the world's most expensive city after Tokyo, of the Dickensian deprivation suggested by bleak statistics.

The NCC says that the combined debt of all British households has soared to £1 trillion, which is more than the total that all Asian, African and Latin American countries owe to lending agencies, banks and donor governments.

Six million British families are finding it difficult to keep up credit repayments, and there has been a 44 per cent increase in the number of people seeking guidance from the Citizens Advisory Bureau on coping with overspending problems.

Each adult Briton owes £17,000. British students who have to fend for themselves are saddled with a debt of nearly £12,000 by the time they graduate against only £6,000 seven years ago.

An astonishing 15 per cent of Britain's population languishes in poverty, victim of deprivation, chronic unemployment and low literacy. (The report says nothing about their ethnic origin.)

Nearly five per cent unemployment means that employment growth is under one per cent, though nearly three per cent in Ireland. Oxfam even has a poverty programme for Britain which is said to be the poorest European Union member.

All this is true but not the truth. Some difficulties may even be problems of plenty. Mortgage dues have increased to £827 billion because 68 per cent of Britons own their houses now against only 40 per cent at the end of the Second World War.

Opposition Conservative politicians who blame Tony Blair for the indebtedness are really paying him a compliment. The sense of wellbeing generated by higher average earnings, fatter bonus packets, low interest rates and spiralling property prices has given a boost to conspicuous consumption.

Everybody not only wants "" but can "" keep up with the Joneses. Everybody is forever buying on the legendary never-never, as it used to be called.

The downside is that the gap between rich and poor is wider than in Sri Lanka or Ethiopia. That is one worry for a still basically feudal society that takes seriously the welfare of its serfs. But overstretched credit causes far more concern.

The NCC's findings that indebtedness shoots up by £1 million every four minutes and that one in 20 households uses up more than 25 per cent of its income on repayment indicate that today's British have little time for Polonius's principle in Shakespeare's Hamlet, "Neither a borrower nor a lender be.".

People cannot resist the temptation of lavish overdrafts, generous hire purchase offers, plausible lenders and the ubiquitous rectangle of plastic.

Luckily, India and most Asian countries charge a fee for the joy of possessing it, which ensures that cards are handled with respect. They would be unwise to follow Britain where free cards are hurled at the immature and the unwary who, in turn, hurl them at shop cashiers with reckless abandon.

A friend who was overdrawn at his bank was not asked to clear his dues; he was invited to upgrade his silver card for gold. Another friend, also in London, the mother of three, all students without money of their own, tells me they receive piles of seductive letters like the one to my son. She always lies in wait for the postman, intercepts these letters and tears them up.

I am glad I followed her example. The small act to save me from bankruptcy was also a contribution, albeit minor, to Britain's solvency.