Instead of saving for children's education or marriages, the Indian middle-class group is now saving money to meet uncertain healthcare expenses.
The coronavirus pandemic has changed people’s priority on saving money. Instead of saving for children’s education or marriages, the Indian middle-class group is now saving money to meet uncertain healthcare expenses. Covid-19 treatment, medical emergency, loss of income, and untimely death of the earning member, are among bigger concerns for the middle-class Indians than their kids’ future education. In a survey conducted by Max Life Insurance in partnership with research firm Kantar, it was found out that the people living in the metros are financially least secured (46 per cent), while those in Tier 1 and Tier 2 cities are financially more secured (55 per cent and 52 per cent).
India Protection Quotient 2.0 – the degree to which Indians feel protected from future uncertainties – stands at 47, which means digitally savvy urban Indians are feeling attitudinally less secure amidst the COVID-19 crisis, said Max Life Insurance. Other investments and expenditures such as old age security, buying a house or car, and travelling have also taken a backseat in these challenging times. Despite the government’s efforts to make credit from banks cheaper, people are keeping away from taking fresh loans as they are uncertain about their incomes and thus they fear that the commitment for future repayments may land them into trouble.
According to RBI’s July bulletin, personal loans contracted by 2.9 per cent in the financial year so far. In the personal loans segment, loans for consumer durables shrank by 6.4 per cent, loans for housing shrank by 0.7 per cent, credit card outstanding fell 14.1 per cent, while loans for education and vehicles fell 0.8 per cent and 2.7 per cent in the same duration. Amid the emerging concerns of the global recession, rising number of coronavirus infections, and unavailability of the coronavirus vaccine, people are saving almost half of their income for the short-term uncertainties.