The covid-19 pandemic has had an impact on household incomes, forcing families to reduce their investments and reallocate funds to household spending and savings, the Nielsen market research report said on Friday.
Nielsen surveyed 1,190 people in 12 cities in April about their financial health in low-, middle- and high-income households.
Almost 60% of those polled said the pandemic has had a negative impact on their household income, affecting the way they now distribute monthly income between categories. Nielsen said pre-planned spending for the September quarter is reallocated as consumers try to save money and secure cash for future spending.
It is the result of financial uncertainty brought on by covid-19 which has led to prolonged foreclosures and layoffs across sectors, and hampered economic activity. âThe majority of household income has been negatively impacted, with the contribution of regular spending increasing and budgets being managed by reducing investments,â Nielsen said.
Nielsen’s estimates come as the Reserve Bank of India (RBI) on Friday cut the repo rate by 40 basis points, a step that will help lower lending rates further. RBI also decided to extend the current three-month moratorium on loan repayments by three months.
RBI Governor Shaktikanta Das said covid-19 had dealt a heavy blow to private consumption, which accounts for around 60% of domestic demand.
Respondents in April said they had to change the distribution of their spending between investments, savings (money in the bank or cash), credit and credit card contributions, and their share of monthly household spending.
For example, in low- to middle- and high-income households, respondents reduced their monthly investment income allowance from 20% before covid to 16% during covid-19.
Low-income households, according to Nielsen, are those with monthly household income ??50,000; while middle-income households are those between ??50,001 and ??1 lakh. Nielsen describes high-income households as those with a monthly income of ??100,000 and more. âSo regular spending has increased in low to middle income households while high income households have seen no impact,â said Sameer Shukla, Western market leader, South Asia, Nielsen Global Connect.
Respondents said they plan to keep some major planned expenses such as travel and the purchase of household appliances. Only 28% said they felt confident enough to move forward with their planned spending, while 24% said they would put their plans on hold for a full year.
Over 20% said they would keep their funds while an equal number said they would invest their money. âConsumers who buy furniture and durable goods are more inclined to go ahead with the plan,â Nielsen said.
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