As Union Finance Minister Nirmala Sitharaman prepares to present Union Budget 2023 on Wednesday, most households are looking for some financial respite, particularly Income Tax relief, amid fears of global recession and its impact on savings and salaries.
According to a survey conducted by community social media platform LocalCircles, six out of 10 households are facing a squeeze in their earnings and savings in the current fiscal 2022-23.
Not only this, 56% households have projected a dip in their savings in 2022-23, while 52% expect economic uncertainty to last for another six to 12 months.
Lower incomes but higher household expenses had hit a large number of Indian households during the Covid-19 pandemic. For many, rising inflation over the past 12 months has spelt trouble for most families grappling to make ends meet.
The survey was conducted to understand the earnings and savings situation of Indian households, in the backdrop of continuing high prices of vegetables, pulses, oil, milk among other essentials. It also sought to understand how people are planning their household finances.
The survey sought to estimate the change in household earnings for FY 2022-23, which ends in March 2023. In response, 60 percent households indicated that they project a dip in household earnings this year.
Of them, 7 percent projected a 25 percent dip in income, 22 percent expected a 10 percent to 15 percent dip while 10 percent expected a dip of anywhere up to 10 percent; and 21 percent were uncertain but expected the dip.
But on the brighter side, 25 percent households project higher household income, even up to 25 percent in FY 2022-23, while 7 percent are not projecting any change at all.
Over the past year or so, household consumers indicated that they have had to dip into their savings to make ends meet. This is because prices of most essentials have been rising due to different global and domestic factors starting with the Russia-Ukraine War in March 2022, combined with rising cost of products and services that impact middle-class households; and in some cases due to job losses or layoffs.
In most cases, families’ incomes have not kept pace with high inflation. Unlike those in government jobs, private sector employees get no relief in the form of dearness allowance or other allowances to offset rising costs.
There has, however, been some good news. Inflation data-based wholesale price index in December eased to 4.95 percent after being reported at 5.85 percent in November. At present, the WPI inflation is also less than the consumer price index (CPI) inflation, which dipped to 5.72 percent in December, below Reserve Bank of India’s upper tolerance level of 6 percent.
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