Paying EMI's proving thorn in one's side

Even though the total household debt in India from the formal sector amounts to just over Rs.5.58 lakh crore, (might seem a big amount to say ONLY, but that's about hardly 10% of the GDP), but the figures have upsurged during the current economic slowdown making the middle class in metros susceptible to a financial deadlock. Recent studies have revealed that middle-class households across metros like Delhi, Chennai, Bangalore and Mumbai cough up spending approx. one-fourth of their hard earned income on paying EMIs. And the major-league expenditure include paying up for housing, auto, durables and personal loans. Nearly two-third of these households have resorted to personal loans in the last two years itself and over a third of people in these metros have invested in stocks.

As per a recent consumer survey conducted by the prominent New Delhi based market analysis firm, Indicus analytics, salaried households in Kolkata pay up to 27% of their monthly income on EMIs. Talking about Mumbai, the stats reveal that the non-salaried class carry the maximum personal loan burden amounting to Rs. 1.45 lakh. Gold, provident fund as well as fixed deposits have remained a hot destination for investors, particularly the south Indians, with about one in every two households investing in yellow metal.

Coming to the point, it is not a rare sight to see hoardings of EMIs as one travels, hear and see companies offering the 'best' schemes and trying to outdo each other to grab the market. While on an outset this might seem very lucrative for the consumer who is being offered different options to chose from, consumers must realise that the same is only meant for those who are in need of something but can't afford to pay for the same in a lump-sum amount. But the current trend is obviously something else. Not to offend anybody's personal sentiments, those who were earlier in need (and could afford) only a two wheeler, can today easily opt for a small car courtesy EMIs. The result, they end up paying a substantial amount of their salary on something they don't really need. Considering the current market scenario when many banks across the country are being rumoured to be in financial crisis (let's leave the talk of politicians for a moment), would it really be a smart decision to go for an installment scheme until and unless you really need it? I think otherwise.