'Bengal households at financial risk'

Kolkata, Mar 30 | Updated: Mar 31 2007, 07:33am hrs
A financial crisis is brewing in the household sector of West Bengal. The state which has one of highest awareness of life insurance, but few takers, an overwhelming majority of the households are financially at risk on loss of the breadwinner.

This was revealed by a joint study, India Financial Protection Survey - 'How India earns, spends and saves' conducted by Delhi-based leading think tank, National Council for Applied Economic Research (NCAER) and Max NewYork Life Insurance.

The study says that 99% of the households surveyed in West Bengal are financially at risk on loss of the breadwinner. "In Kolkata, almost 58% households said they will not be able to survive for more than six months and 18% will be able to survive up to one year on their current savings. Only 3% households in Kolkata said they will be able to survive more than a year in the loss of the major source of household income," the survey said.

Insurance awareness in the state is about 95% as against all India average of 78%, while 31.5% of the households surveyed are insured as against 24.8% in India.

The survey has also pointed out the state is characterised by misplaced financial optimism. "The survey brings out that the financial optimism is not based on facts. About 99% of the households feel that they cannot survive for more than one year on their current savings in case of loss of major source of household income and yet 61% households feel that they are financially secure," the study pointed out.

The study covers a stratified random sample of 3900 households in the state and the date was collected between October 2005 and January 2006.

The study furthermore points out that the households in the state borrow mostly to cover routine expenditure and an 'alarming' 85% households borrow from shopkeeper to meet routine expenditure and 64% borrow for health purposes and 60% from the money lenders to cover special expenditure like wedding, child birth etc.