A post-pandemic crisis of income uncertainty
A survey of urban millennials has revealed how badly their household budgets have been battered by the covid crisis. Unaddressed, it can spell a long demand slump in our economy
Indian consumer confidence, as tracked by the Reserve Bank of India, has been abysmal ever since covid broke out. Now the latest findings of the YouGov-Mint-CPR Millennial Survey, conducted by the global pollster in alliance with this newspaper and the Centre for Policy Research, has revealed worrisome self-reported details of what the crisis did to household finances. Carried out in October and November across 203 urban centres, the study’s sample of nearly 10,000 respondents, half of them millennials (aged 24-39) and the rest either younger or older, is fairly representative of a vast cohort that accounts for the bulk of private consumption in the country. More than three-fourths said they experienced financial stress after India’s lockdown, while about half reported having to dip into their savings; about a third said they had to borrow money to meet expenses. As economic theorists expected, precautionary savings rose even as people’s liquidity preference grew more pronounced. Not only did most opt to keep money in easily usable forms (cash and demand deposits), very few said they would spend any windfall gains that came their way. Unless their anxiety eases, which would take a shift in material circumstances for the better, the thrift forced upon urban consumers will likely keep demand dampened in various markets for a prolonged period and thus act as a drag on our economy.