Rising cost reduces household budget, some relief for the poor

Various expenditure items including essential expenditure came under pressure. Most people reported increased spending on groceries, utility bills, transportation, and health care. Each category became significantly more expensive in 2021 than in 2020. The cost of fuel was higher than any other item for 75% of the respondents.

It’s no surprise, when asked how to rank expenses based on how much they slashed their budget, Fuel turned out to be the worst villain. But the effect varies by one’s income level. Lower monthly incomes made them more likely to struggle to pay essential bills, while wealthier groups were more likely to be pinched by rising medical expenses and the cost of luxuries and consumption goods.

The latest round of the biennial survey covered 12,900 respondents in 206 cities during November-December 2021. This was the seventh such survey jointly conducted by global market research firm YouGov, Mint and the Indian arm of the Delhi-based Center for Policy Research. (CPR). Roughly 45% of the sample were Millennials, one-third post-Millennials (ages 18–24), and the rest pre-Millennials (40+).

no income consolation

Ahead of Budget 2022 next week, the survey findings offer a disturbing glimpse of how the first and second waves of Covid-19 have left behind a long trail of income and inflationary pressures on Indian households.

About 60% of the respondents attributed the increase in the cost of living to their increasing budget. But another reason behind the crisis could be a shift in income – and its stark inequality. Those who had already earned less were more likely to see a further reduction in wages last year. In contrast, nearly half of those in the higher income group saw a wage increase, while the same was true for only 29% of those in the lowest income group.

Furthermore, a large minority of respondents across all income groups—about 40%—reported no change in their monthly income.

This shows how the poorest individuals in India’s income pyramid were particularly badly affected by inflation. Although the employment number is advanced Since the first lockdown, the crisis has not gone away completely, and remains uneven.

Financial Crisis

A majority (81%) of those polled claimed they faced some form of financial hardship in 2021, and the primary explanation can be traced to inflationary pressures. The less you earned, the more likely you are to face financial hardship.

The biggest disadvantage of this inflationary headache was the ability to maintain one’s planned savings and investments, with 44% of the 7,869 employed respondents saying they encountered difficulty in doing so. Since savings are a hedge against future crises, the impact on households’ spending power could persist until 2021 unless there is a substantial increase in income.

There is hardly any hope: while two out of three respondents expect income to increase in the coming year, low earners expect income to decrease (12%) compared to high earners (6%). Worse, income insecurity is set to persist for a long time: 84% of those whose income grew in 2021 expect it to rise further in 2022, but only 47% of those whose income declined expect.

purchasing power

The pandemic has taken away the appetite to make big-ticket purchases like property or cars. While 22% of respondents planned to buy a home within a year of the 2019 survey, the share declined to 15% in 2020 and only marginally improved to 16% at the end of 2021. For cars, the share was 30% in 2019, followed by 21% and 22%. The appetite for two wheelers has not changed much.

The new work-and-study-from-home reality has shifted the focus to electronic shopping. One in three people surveyed plan to buy a gadget or laptop in the coming year. Purchases of other consumer durables are expected to be limited similarly to 2020.

Signs of inequality in the way Indians view inflation pose a challenge to policymakers as they grapple with the enduring domestic crisis left by the pandemic.

This is the fourth in a five-part data journalism series based on the biennial YouGov-Mint-CPR Millennial Survey. The concluding part will release on February 9.

first part Last year focused on the big churn in the job market, second part noticed an increasing trend of investment among young Indians, and third part Explored the political bias that permeated urban India.