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The ongoing economic crisis has taken a heavy toll on personal finances of Indian citizens. Many have dipped into their past savings to meet monthly expenses, and many haven’t been able to repair household balance sheets, or plan for the long term. The preference for cash and cash-like instruments, such as savings accounts, went up sharply in urban India, while the appetite for long-term investments and big-ticket purchases, such as cars and houses, declined.

These are some of the key findings of the latest round of the YouGov-Mint-CPR Millennial Survey, which asked a range of questions relating to the financial status and well-being of nearly 10,000 respondents spread across 203 cities and towns of the country during October and November.

More than three-fourths of respondents said they faced financial stress since the lockdown was imposed in March to curb covid-19. Nearly half of them had difficulty in maintaining their monthly savings and investment targets. Nearly a third faced difficulty in paying their utility bills and loan repayments.

The YouGov-Mint-CPR Millennial Survey was conducted jointly by the Indian arm of global market research firm YouGov, Mint, and Delhi-based think tank Centre for Policy Research (CPR). Roughly half of the respondents were millennials (aged 24-39). The rest were post-millennials (aged 18-23) and pre-millennials (above 39). The survey is the fifth of a series of biannual online surveys aimed at examining the aspirations, anxieties, and attitudes of India’s digital natives.

On most counts, the pandemic’s impact has been unequal across income classes, with poorer respondents hit harder. However, even richer respondents faced financial stress, the survey shows. Among those earning more than 1 lakh a month, 71% said they experienced financial difficulties during the lockdown. Among those earning less than 20,000, this figure was 86%.

As many as 45% of the respondents dipped into their savings pool to meet their expenses. A third borrowed money. Respondents from families with six or more members relied more on their extended family for help in covering living expenses.

High inflation meant a double whammy for consumers this year, who were already reeling under the weight of income and job losses. The overall monthly expenditure went up for nearly 60% of respondents. Most respondents reported an increase in their grocery bills, suggesting that the rise in food prices had eaten up a large share of household budgets this year. Utility payments also went up as work-from-home became the norm. Medical expenses, too, went up for a large proportion of respondents.

While there have been anecdotal reports of higher spending on over-the-top platforms and similar entertainment services, there is a big class divide here. Only those at the top of the income pyramid saw such spending increase. For others, such spending remained low as they were forced to spend largely on essentials.

As some economists had anticipated, precautionary savings went up in the post-lockdown period. However, people preferred to save money as cash or in cash-like liquid instruments rather than plan for long-term investments, which offer higher returns.

The ability to save varied across income classes. Among respondents earning less than 20,000 a month, the share of those who were not able to save anything at all went up this year. Among those earning more than 50,000 a month, the share of those who were able to save more than 20% of their incomes went up sharply compared to the same period a year ago.

Across income classes, the pandemic shock seems to have raised the preference for ready cash. The decline in incomes and the uncertainties surrounding the uneven recovery so far seems to have dented consumer confidence and made many people wary of medium-term or long-term investments.

The survey data suggests limited appetite among urban Indians to spend on big-ticket items. Compared to the same period last year, fewer respondents said they intend to purchase a car or a house in the coming year. The proportion of respondents who said they will purchase a two-wheeler remains unchanged across the two surveys. Plans for purchases of other consumer durables also seem muted.

Will most people start spending if they get a windfall gain, in the form of tax cuts or a direct cash transfer to their accounts? The answer depends on whom you ask.

Among respondents earning less than 20,000, the responses were split along the middle. Half of the respondents said they will use such windfall either on immediate expenses or to pay off old debts. The other half would save or invest.

Among richer respondents, a majority would prefer to save or invest rather than spend immediately, the survey data suggests.

The latest survey suggests that India’s economic recovery is likely to remain uneven unless our policymakers find innovative ways to raise purchasing power at the bottom of the income pyramid and help boost overall demand in the economy.

This is the second of a five-part data journalism series on how the pandemic has impacted India’s digital natives. The first part looked at the unequal impact of job and income losses among young urban Indians.

The authors are with the Centre for Policy Research (CPR), New Delhi.

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