The slowdown is taking a toll on people’s spending habits. Young Indians are becoming more cautious about how they use their money.
Lalit Pandey (30), working in an Indian auto company in Pune, recently applied for a home loan of Rs 40 lakh to buy an apartment in that city. This is his first loan and the R40,000 equated monthly installment (EMI) that he will have to pay is within his means.
Somnath Sircar (42), a resident of Kolkata, on the other hand finds himself juggling with a housing loan of Rs 45 lakh on which he is paying R46,000 as EMI. Then, he has to set aside another Rs 35,000 every month to service his car loan, personal loan and three credit cards.
Managing his finances is a struggle. He wants to repay some of his loans and bring down his monthly outgo, but doesn't have enough surpluses to do so.
Pandey and Sircar are typical examples of their respective generations. Growing insecurity among consumers as a result of the prolonged economic slowdown has led to a change in spending patterns, a Credit Information Bureau India Limited (Cibil) study has found.
Cibil is India's leading credit information company and tracks, among other things, loans of and repayments by individuals.
“There has been a dramatic shift in the borrowing pattern of consumers and, today, they are more careful than before. Young, first-time consumers have generally taken loans for assets like a house or a car,” said Arun Thukral, managing director, Cibil.
“It’s probably a result of the ongoing economic slowdown. Earlier, we would see young consumers with first-time jobs immediately go in for loans against their credit cards but that has slowed down considerably. We’re seeing a completely different spending pattern among the youth today,” said a senior executive at HDFC, who did not wish to be identified.