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|No budget worries for Youngistan|
|Saturday, 04 July 2009 18:30|
The latest commercial for Cadbury's Daily Milk chocolate has the tag line 'aaj pehli tareekh hai, kuch meetha ho jaaye'. It claims to capture the
But unlike in the ad, that has an employee singing and dancing about getting his salary, advertising professional Cherry Batra has mostly bitter moments on the first day of a month. "My salary has come and gone, and it is only the second day of a 31-day month," says the 27-year-old.
Batra spends, on an average, 35% of her salary or about Rs 8,000 on credit card bills, provided she hasn't skipped payment in the previous month. She spends another 30% on everyday expenses like conveyance, food, etc and another 15-20% on entertainment. "Most of my credit-card spending is on socialising, the rest is on shopping," she says.
Batra belongs to the 70% of the country's population of 1.1 billion that is under 35. In urban India, middle and upper-class consumers like Batra are referred to as YUMPIs - Young, Urban, Mobile, Professional Indians. They are the ones who have written the India story about consumer confidence and rarely hesitate, as studies show, to bill the latest cell phones, branded clothes and accessories to their credit card.
According to the latest research in the India Retail Report 2009, retail spending by Indian consumers is expected to rise from Rs 13.3 trillion now to Rs 18.1 trillion by 2010. This huge increase can be put down to the fact that not only are incomes rising but younger people entering the workforce are more prepared to spend money than their parents were, according to Geoff Hiscock, author of 'India's Store Wars: Retail Revolution and the Battle for the Next 500 Million Shoppers'.
Hiscock reportedly said that despite the recent shocks caused by the sub-prime crisis, young Indians are prepared to borrow money and are more aware of the sources of credit available to them.
The Wallet Monitor, a study conducted by IMRB and Henley Centre, had said in December 2005 that the spending patterns of an average Indian household point towards the emergence of an "individualistic, indulgent, happy and confident Indian consumer who enjoys spending money on personal grooming and entertainment". This consumer has also given rise to a new term - 'youngistan', now frequently invoked to describe a generation whose habits in love, life and spending are anything but traditional.
It is unsurprising then that a quarter of Standard Chartered Bank's credit card holders are in the under-30 age group.
"The younger lot spend on retail fashion, eating out, gadgets etc.," says R L Prasad, GM, credit cards and personal loans.
But this should not lead one to believe that the spend mentality has replaced the save mentality. The earn-and-burn generation believes that investment for the future is important. Like banking executive Pranav Raje, who knows that a lot of older people raise their eyebrows at his expenditure of Rs 15,000 a month on socializing. "But I know investments are important and thus have bought a flat. The EMI of Rs 20, 000 is my way of saving for the future," says Raje.
There are also many young Indians like 16-year-old Mirinalini Sinha, who don't earn anything but make sure to dent their anguished mothers' "household budget by impulsive shopping and whimsical demands". Apart from the expenditure on education (she wants to go to a global school now) and general needs, Sinha spends Rs 200-300 on one 'regular outing three times a week' and between Rs 1,000-1,500 on weekend dinners and parties. "It is like she has taken it upon herself to boost the economy," exclaims Sinha's mother.
You would think that this demographically significant age group demands consideration in the Union Budget. But it doesn't. Laveesh Bandari, who heads Indicus Analytics, an economic research firm in New Delhi, says individual spending does not play a significant role in the budget. "The middle and higher income groups in urban India spend mostly on semi-luxury and luxury goods and nobody cares about that in the budget," he says. Arvind Singhal,chairman, Technopak Advisors, says, "Spending patterns of the 18-35 age group don't matter in the larger picture."
And does it matter to them that the budget may not have much in store for them? As Batra says: "If they tell me I can save more taxes on my Rs 1-lakh investment every year, I am interested. Otherwise, who cares?"
Source: Times of India