Most 23-38-year-olds save little after paying rent, taxes and EMIs and spending on eating out, shopping
India’s 440 million millennials saw little relief as prices of items such as fuel and gold were proposed to be hiked in NDA’s first budget after it returned to power
Apart from the intense heat wave that prevailed over parts of India in June, the Rathi household has had to deal with another unexpected shock that upset their monthly budget.
“We paid ₹10,000 just as GST (goods and services tax) for our new air conditioner," said Mukta Rathi, a 35-year-old homemaker who lives in Indore. “These things pinch now." Rathi takes art classes at home and helps her chartered accountant husband with his office work.
While Rathi said that the government’s push for digitization and cashless transactions has helped shoppers like her access options online and save money, “overall running a household has become more expensive today" because items such as air conditioners are now taxed at the highest GST slab.
On Friday, shoppers such as Rathi, among India’s 440 million millennials, saw little relief as prices of items such as fuel and gold were proposed to be increased in the National Democratic Alliance (NDA) government’s first Union budget after it returned to power. The government also proposed to increase import duty on split air conditioners to 20%. The budget presented by Union finance minister Nirmala Sitharaman stressed on investment in infrastructure, job creation, and digital economy.
However, it left tax slabs for salaried middle-class people unchanged, even as it offered incentives to home-buyers in the country. The budget also increased the prices of fuel and diesel by ₹2 per litre in a move that is set to raise the monthly expenses of households.
Millennial consumers said they have little left to save after having to spend on phone bills, fuel, monthly instalment payments, and eating out.
After wrapping up her afternoon show at Indore’s popular radio station My FM, radio jockey Anjuli Shukla, 24, said her lifestyle has changed since she started working. “When you reach a certain level, your aspirations go up," said Shukla, who bought her first car in 2017. Shukla, who pays a monthly instalment of ₹7,000 for her vehicle, said she frequently eats out and shops, but struggles to save any money because “there is always something new to buy".
Shukla is happy with her career, but feels the middle-class is being over-burdened. “We pay our taxes on time. We add so much to the economy, but the government benefits go to those above us or to those below us," she said. Shukla said the higher fuel prices in the Union budget will only add to her burden.
Yash Koshti, 26, who works as a manager at a large departmental store chain, shares Shukla’s views. “The middle-class is always paying taxes—we pay tax on our salaries and on things we purchase," said Koshti, who is looking to invest in real estate but finds the prices are too high.
“We don’t have enough money to buy a lot. We look for the best deals, as living costs are high," he said.
For Koshti, the government’s move to offer additional deduction of up to ₹1.5 lakh for interest paid on a loan borrowed up to 31 March 2020 for purchase of house up to ₹45 lakh came as a relief. “This could be beneficial for us," said Koshti, who is eyeing properties in the range of ₹15 lakh to ₹20 lakh.
At the Indian Institute of Management, Indore, 28-year-old Sanchita Roychowdhury, who is pursuing a PhD in economics, said scholars and researchers deserve higher stipends.
In its 2014 budget, the Modi government announced the opening of several new Indian Institutes of Technology, Indian Institutes of Management, and All India Institutes of Medical Science to improve standards in higher education. In her budget speech, Sitharaman allocated an additional ₹400 crore for setting up world-class higher education institutes.
Living costs are escalating even in non-metros, said Yusuf Hassan, 26. “Prices have increased post GST. We can clearly see it at restaurants or day-to-day commuting," said Hassan, who is pursuing a PhD in human resources.
In the Chappan Dukan market, young students gather outside cafes, and food delivery riders from Uber Eats and Zomato zip through the streets. In fact, Indore requests more midnight deliveries than Mumbai, food delivery company Zomato said in its annual report earlier this year. It is in this market that 25-year-old Abhishek Yadav is taking a short break. Yadav, a teacher at Indore’s Kothari Institute, which prepares students for civil services exams, said the interim budget announcement to exempt those earning less than ₹5 lakh from paying taxes has benefited people like him. “It helps those who are just entering the workforce," he said. In her budget speech Sitharaman, kept this proposal unchanged.
Though millennials hope to own a house, they struggle to find the capital to buy property. For Uber cab driver Sahil Pawar, 26, getting a home loan is a challenge. “If there is one thing I would want to buy, it is real estate," said Pawar, a native of Indore who supports a family of four. Pawar said it’s hard to build his savings as he is still paying off a car loan he took in 2015. “But once I get more money in hand, I will buy land," he said.
Pawar, part of the city’s growing gig economy, is also representative of the ways in which cities such as Indore are changing on the back of digitisation and improved infrastructure. Once a hub for traditional business in finance, trading and manufacturing, Indore now accommodates well-funded start-ups and business process outsourcing units, too.
Govind Agrawal (37) and Arti Agrawal (36), co-founders of Anaxee Digital Runners, said startups in India should have fewer compliances to deal with. With Startup India “they are doing all the right things, the registration on the platform brings some level of credibility for companies", said Govind.
As the scope of India’s start-ups has grown, the government has introduced regulations such as angel tax. This, according to the Agarwals, adds to the compliance burden for start-ups. Paying heed to the concerns of start-up founders around angel tax, the government in its budget speech has further simplified angel tax by abolishing the scrutiny in regards to valuations of share premiums for start-ups and investors who file the required declarations.
Rajat Wahi, partner, Deloitte Consulting India, is of the view that the 2019 Union budget offered a push for millennials by giving more incentives to start-ups. In addition, the push for infrastructure spending also remains a plus for this consumer base, he said.