Budget 2024: Nearly One In Two Indian Households Fear Fall In Income, Savings

Nearly half of Indian households are expecting a downturn in earnings and savings in fiscal 2025, according to a survey conducted by LocalCircles. Many are expecting a respite from the squeeze as Finance Minister Nirmala Sitharaman presents her seventh Union Budget next week.

In a survey spanning 21,000 respondents across 327 districts, LocalCircles found that 48% households foresee a decrease in their annual earnings compared to the previous fiscal year. Similarly, an equal percentage expects a reduction in their average household savings during the same period.

The survey asked respondents about their expectations for household savings in the upcoming year (April 2024-March 2025) compared to the previous year (April 2023-March 2024). Out of 10,820 responses, 10% projected an increase of 25% or more in savings, another 10% anticipated an increase of 0-25%, and an additional 10% expected some increase without specifying the amount.

Meanwhile, 18% predicted their savings would remain unchanged. 28% foresaw a decrease of 0-25%, 15% expected a decrease of over 25%, and 5% anticipated a decrease without specifying the extent. 4% of respondents did not provide a clear response.

The survey attributes these projections to escalating living costs, including food, education, rent, transportation, and utilities. Many families find their incomes insufficient to cover these essential expenses, forcing them to dip into savings, liquidate assets, or resort to loans.

Highlighting a broader trend, India's household savings rate has declined significantly from 22.7% of GDP in FY21 to 18.4% in FY23, according to data from the Ministry of Statistics and Programme Implementation.

Household savings had touched a peak of Rs 23.29 lakh crore in fiscal 2021, the year which saw the second wave of Covid. It has been on the decline after that. It fell to Rs 17.12 lakh crore in fiscal 2022 and further to Rs 14.16 lakh crore in FY23, the survey pointed out.

With Finance Minister Nirmala Sitharaman set to present Budget 2024 next week, there is widespread hope among households for relief measures. Respondents expressed expectations for potential reductions in income tax rates, expanded tax exemptions, or increased deduction limits under Section 80C to ease financial burdens.

The survey reflected a diverse demographic and geographic representation, with 44% of respondents from tier-1 cities, 32% from tier-2 cities, and 24% from tier-3, 4, and rural districts.