I don’t earn enough to remain thrifty. Well, it might not sound conventional, but, in my opinion to remain thrifty one needs to have a blanket of surplus money, left-over, after meeting ones essential and semi-essential needs. Hence, I need more money to remain thrifty. Now, what incentive do I have to be thrifty today? I am a little over a couple of decades old and I believe I possess a reasonable set of employment- friendly skills which should place me with a decent paying job in near future. So I reassure myself that I needn’t be as thrifty as I should otherwise be. This reassurance makes me go about running my life peacefully and without any anxiety about future and its fall outs.
However, I am currently being consumed by this disillusioning fear of tomorrow. Not because I can picture one but for the exact opposite of it. When I mean picture I understand I am being quite selfish in trying to concentrate my faculties to sketch a feel of my future, which I may or may not understand. To sound more precise, I am afraid whether I can sustain the style of living I have developed in the last few years. Not that I lead a flamboyant one but I wish to keep my dear and near in good company. Believe me, the goodness of one’s company has a (however, insignificant it may be) functional relationship with one’s earning.
It might be too early for someone like me to worry about a post superannuation or retirement life. But, being an inherent risk mitigator, I have enough reason to worry about my capacity to smoothen my consumption and thereby avoid unwarranted and unappealing jerks to my style of living. I have begun scouting for options available both inside and outside the finance world which will incentivize me to become thrifty when I start making some surplus.
To my dismay, in my country I find very few such options. I wonder what may be the plight of my not-so-lucky fellow citizens, who can neither afford to be thrifty nor afford to be not thrifty.
The Indian financial markets might have broadened and deepened, might also boast of increasingly complex financial solutions to meet the needs of a select progressive class of citizenry. However, a large chunk of our populace is nowhere in the priority list. More than 70 % of this country’s citizens don’t have clue as to how their consumption power will remain (read life sustain) in this break neck speed economy. It is important to acknowledge the ills of super fast growth and try to rectify them to make sure the benefits of this growth percolates to all. Take an example of a small private business clerk (having 10 more years of service) who probably earns Rs 15,000 a month and saves Rs 2000 and having access to pension/provident funds offering 10% P.A interest rate on deposits. Also assuming an average Income growth rate of 10% P.A, if he begins to invest in these funds, he can aspire to earn around Rs 8 lacs. Assuming a steady inflation rate of 5%, the small business clerk would need approximately Rs 22,000, 10 years hence, to sustain his current consumption level of Rs 13,000. Is it feasible to earn Rs 22,000 per month with a corpus of Rs 7, 00,000 during retirement? In my opinion, it is feasible only to a financial genius who is capable of making the right bets in the financial market can and not to a regular small business retiree. Other option left to this then old man is to seek the generosity of his children or wards. Given the rate of disintegration of India’s traditional family set-up (also India’s most important old age social security system), this is not the best bridge insurance.
Compared to the problems of this small business clerk, mine are small and insignificant. But I am alert to make my hay while the sun shines. Not many are, not many are even aware of this impending plight. Not many can withstand it, I am not predicting an Armageddon but I am most definitely warning of an impending public finance crisis, if systems are not established to take care of the future of millions of have-nots and potential have-nots. PFRDA is a good initiative, but its role seems to remain dormant. I don’t see the kind of publicity I have expected (which it rightly deserves in order to attract savers). Government should also consider tying up with private superannuation fund managers to design micro or maybe even nano plans to suit the needs of our motley citizenry. The policy makers must realize that private thrift (by the common people and not only by businesses) is required to sustain our development momentum. Hence, they must focus their resources to make thrift accessible to our masses.
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