Page 59 - IMDR EBOOK 20 OCT 2020

"Pandemic and Beyond: Naviga ng the New Normal" E - Book Year 2020

A Study of Changes In Individual Income, Spending & Saving Pattern
8 As a Result of Covid 19 Situation In India.

CA Sweta Agrawal Jain – Assistant Professor - IMDR, Pune
Abstract
With Covid 19 Pandemic, the question arose regarding the uncertainty of Income among Indians.
While all the sectors are impacted due to the unprecedented downturn in the economy, some are
impacted more than others. Many small businesses are facing risks of closing down, whereas
large organizations are also cutting down expenses by way of reduced salary payment to
employees. Change in Income will also have an impact on Spending & Saving pattern. This study
was conducted with an objective to understand the changes in Income, Spending & Saving
pattern, of individuals in India. The survey was conducted online & 116 responses were collected
Pan India, with a demographical mix of salaried & self-employed individual.
The ndings show that there has been very signicant change in Income for Indian individual.
The degree of change is more prominent for entrepreneurs as compared to salaried. Changes in
the expenditure is also signicant & may also be caused due to forced lockdown, as people are
not able to go out & spend. There has not been much change in the saving pattern due to Covid 19
impact & most people are preferring to keep their savings in Cash form.

Keywords: Covid 19, Income, Spending, Saving, Changes
Introduction
Corona Virus or COVID – 19 has shaken the global population by its roots. It has taken toll not
only on health grounds, but has also given an economic shock. The rst of its kind Pandemic
situation has created unrest among the largest economies & biggest democracies alike. While
countries are struggling to reduce the spread, by quarantine/lockdown measures, the danger on
the livelihood is also very evident.
First reported in Wuhan, China, in December 2019, Covid 19 stepped foot in India on 30th
January in Kerala. Since then, the numbers have been growing exponentially. As a response & to
prevent further spread, Government of India announced 3 lockdowns, for 21, 19 & 14 days
respectively, along with closing International, state & district borders. Trade restrictions caused
many organizations to cut jobs by laying off the work force & by cutting down the salaries. While
the impact on Manufacturing vs Service sector is not very clear yet, it is doubtless that all the
sectors are affected by this economic downturn. With the facilities being shut down, most of the
organizations moved to “Work From Home” wherever possible. However, certain business
processes like manufacturing, had to be completely shut off. This shutdown largely impacted the
blue collar workforce, both in organized as well as unorganized sector, but the White collar
workforce did not remain untouched. In the light of a present or expected pay cut intimation, the
behaviour related to personal nance has changed. Families with lesser number of earning
members & more number of dependents seem to be affected more.

The MSME sector is predicted to be the worst hit as despite of other issues, most of the MSMEs
face liquidity issues & may not have enough cash to wait out & survive the lockdown. MSMEs
contribute 30% of the Indian GDP & approximately half of the exports. According to the Annual
report of MSME department, out of 6.34 crores MSMEs being operative in India, 99.5% fall into
the Micro category. Together the MSME sector generates employment for approximately 11 crore
Indians, but it largely consists of employment in SME sector, with Micro industries largely being
operated by a single individual. With borders being closed, most of these businesses do not see
positive cashow & may not survive to see the light of Post lockdown times. The owners of these
businesses as well as their employees are facing great uncertainty related to their future. As per
IMF Chief, Kristalina Georgieva, the economic hit caused by Covid 19 pandemic is the worst
since the 1930’s Great Depression & India is being severely hit due to already stumbling
economy.

Government of India has announced relief packages for survival of industry as well as citizens of
India. So far relief package worth 20 lakh crore INR has been declared by Govt. of India to support
various industries including MSME sectors. While the details of relief package has not been
announced, it is unlikely that the same will have larger impact on the income of urban
population, salaried or self-employed, who generally fall under the category of Middle class
urban population. With impact on the disposable income, naturally there is an impact on
consumption or spending. With people spending less or saving less, it becomes a vicious cycle

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