'Most Bengal households susceptible to financial risk'

Kolkata, Mar 29 | Updated: Mar 30 2007, 06:35am hrs
A financial crisis is brewing in households of West Bengal, where awareness of life insurance is very high but there are few takers for it. An overwhelming majority of households are at risk financially.

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

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

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

The survey has also said the state is characterised by misplaced financial optimism. The survey said, "The financial optimism was not based on facts. About 99% of the households felt they could not survive for more than one year on their current savings without the major source of household income, and yet 61% felt they were financially secure."

The study covered a stratified random sample of 3,900 households in the state. The data was collected between October 2005 and January 2006.

The study also said households in the state borrow mostly to cover routine expenditure. An 'alarming' 85% of households borrow from shopkeepers to meet routine expenditure, 64% borrow for health purposes, and 60% from moneylenders for weddings and childbirth.