96% households in Gujarat feel financially at risk: survey

A majority of Gujarati households "" as high as 96 per cent feel that they are at risk financially and cannot survive on their savings more than a year in case they lose the bread winner or the main source of income.

A survey 'India Financial Protection Survey' by Max New York Life and National Council of Applied Economic Research (NCAER) across the country recently further says that 26 per cent of Gujarat's households and 30 per cent of households of Ahmedabad keep their savings at home, while 58 per cent of Gujarat's and 56 per cent of Ahmedabad's households deposit their money in banks.

Rajender Sud, head (agency),West and South, Max New York Life announced the results of their findings about Gujarat in Ahmedabad on Wednesday.

Astonishingly, on the one hand 96 per cent of Gujarat's households and 98 per cent of Ahmedabad's households feel they are at risk financially in case they lose the sole breadwinner of the family or lose the main source of income, yet 53 per cent of Gujaratis and 68 per cent of Ahmedabad's households feel that they are financially secure.

The results also revealed that though 81 per cent households of Gujarat are aware of life insurance, only 31 per cent own a policy. In Ahmedabad awareness of life insurance is 98 per cent and ownership of a policy is only 34 per cent.

The survey included 63,000 households across the country including 3,484 households of Gujarat and 280 households of Ahmedabad. The survey included rural and urban households.

Rajender Sud told reporters that there is a lack of understanding of the real benefits of life insurance towards both financial protection and long-term wealth creation. At present, 26 per cent of households in Gujarat simply keep their savings at home and 58 per cent deposit their savings in banks.

The survey reveals that though Gujarat saves, the state does not invest wisely. About 76 per cent of Gujarat's households save for emergencies, 90 per cent of them save for children's education, 79 per cent of them for social ceremonies and 60 per cent of them save for old age.

However, savings are not invested in long term instruments. The findings also reveal that Ahmedabad and Chennai are the only cities which save the most for emergencies. Only 30 per cent of households in the city save for old age. Close to 30 per cent of the households in Ahmedabad just keep their savings at home while 56 per cent of them deposit their savings in bank.

The survey also speaks of borrowing habits of the state and the country. In case of rural households health and medical treatment are the major reasons of borrowings. In urban India education constitutes a major reason for borrowings.

An alarming 42 per cent borrow from friends and to meet health and medical treatments, and 34 per cent for social expenditures from friends. Up to 23 per cent of households in Gujarat borrow from moneylenders for health purposes and 12 per cent of households borrow to meet social expenses like wedding, child birth and other expenditures.

However, 26 per cent of Ahmedabad's households borrow from friends and 70 per cent from financial institutions and none of the households of the city borrow from the moneylender.

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53% of Gujaratis, 68% Ahmedabad's households feel financially secure.

26% of Gujarat's households, 30% of households of Ahmedabad keep savings at home

81% households of Gujarat aware of life insurance, only 31% own one