India’s 48 per cent of households expect a reduction in their household annual earnings and savings for the financial year 2024-2025 in comparison to the previous year, according to a survey conducted by LocalCircles, a research agency.
The survey was conducted with a sample size of 21,000 respondents from 327 districts in India. The cluster was further divided into two categories of 67 per cent male respondents, and 33 per cent women respondents.
The survey sample consisted of residents, 44 per cent of whom were from Tier 1 cities, 32 per cent of whom were from Tier 2 cities, and the remaining 24 per cent of whom were from Tier 3-4 cities and rural districts.
The majority sample size of the survey involving households believed that their average household savings were expected to reduce in the current financial year as the cost of living and expenses grew at a faster pace when compared to the earnings of the household, as per the report.
The higher cost of living and other expenses are prompting households to tap into their savings bucket. In some cases, people are opting to take a mortgage against their existing assets or liquidate them to meet their financial needs, the survey found.
The average financial needs of households surveyed include daily expenses to make ends meet and paying for children’s college education.
The survey data also shows that 15 per cent of the households sampled estimate a 25 per cent drop in their savings for the current financial year. At the same time, 7 per cent of households stated that their earnings are expected to drop more than 25 per cent for the year.
The upcoming Union Budget 2024, to be presented by Finance Minister Nirmala Sitharaman on July 23, is giving people a ray of hope. Many yearn for a ‘respite’ in the form of a reduction in taxes or the expansion of the zero-tax bracket in the budget announcement.
“Feedback from households indicates that many are hoping for some respite from this squeeze, be it reduction in income tax rates, expansion of income bracket that gets zero tax or increase of deduction limits under 80C,” according to the LocalCircles survey report.
India’s retail inflation reached 5.08 per cent, a four-month high in June 2024, on a year-on-year basis. The rising inflation was driven by food inflation which makes up for 40 per cent of the country’s Consumer Price Index basket.