Half of India Feels Financial Pinch, Hopes Budget for Relief: Survey

22 Jul 2024 , 12:02 PM

A recent survey conducted by LocalCircles has uncovered that up to 48% of Indian households are experiencing a decline in their earnings and savings for the current financial year compared to the previous one. This comprehensive survey, which sampled 21,000 individuals from 327 districts across India, highlights growing financial stress among various income groups.

Aspect	Finding
Income and Savings Decline	48% of households reported a decline
Inflation Rate	5.08% (June 2024)
Anticipated Savings Reduction	15% of respondents expect up to a 25% reduction
Anticipated Income Reduction	7% of respondents expect a decline exceeding 25%

Survey Insights

The survey included a diverse respondent base: 67% male and 33% female. The geographical distribution showed that 44% of participants were from Tier 1 cities, 32% from Tier 2 cities, and 24% from Tier 3, 4, and rural areas. The findings reveal significant concerns about financial stability, particularly due to inflation.

Inflation Impact

In June 2024, India’s retail inflation rate surged to 5.08%, surpassing the rates observed in the previous three months. Many respondents have reported that rising prices of essential goods and services—such as food, rent, education, and transportation—are severely impacting their financial well-being. As a result, households are increasingly dipping into their savings, borrowing money, or even selling assets to cover basic expenses.

Expected Savings and Income Drop

The survey indicates that 15% of respondents anticipate a reduction of up to 25% in their savings, while 7% expect their incomes to decline by more than 25% in FY25. This projection underscores the growing financial strain faced by a significant portion of the population.

Hopes for Tax Relief in Union Budget 2024

In light of these challenges, many households are looking towards the Union Budget 2024 for relief. According to the survey, there is considerable anticipation for measures such as lower income tax rates and increased tax exemptions and deductions.

“Feedback from households suggests a strong desire for relief measures, including potential reductions in income tax rates, expansion of the tax-free income bracket, and increases in deduction limits under Section 80C,” the survey report notes.

Possible Government Measures

Experts predict that the government might increase the standard deduction limit from ₹50,000 to ₹1 lakh under both the old and new tax regimes for salaried individuals. Additionally, there is speculation that the government could lower the income tax rate for those earning between ₹5 Lakh to ₹15 Lakh annually, and potentially adjust rates for higher income brackets to stimulate consumption.

The current tax regime charges a 30% rate on individuals earning above ₹15 lakh per annum. Lowering this rate could provide significant financial relief to higher-income earners, aiding in broader economic stability.

Conclusion

As inflation continues to strain household budgets, the upcoming Union Budget 2024 could play a crucial role in addressing financial concerns and providing much-needed relief. With expectations high, the government’s fiscal policies will be closely scrutinized to see if they meet the needs of a financially stressed population.