3 Biggest Reasons Why 46% Indians Took Loan To Run Their Household During Pandemic
A report has revealed that as much as 46% of Indians have had to borrow money in order to maintain their household expenditure. The dire circumstances have been credited to none other than the COVID-19 pandemic.
Report Reveals 46% Indians Had To Borrow Money Due To Lockdown And COVID-19
People in India have lost their jobs primarily due to the lockdown that imposed nationwide so as to curb the spreading of the Coronavirus disease. However, while the COVID-19 disease is still here, people have faced a lot of unwanted situations in the lockdown.
The report by Home Credit India, which is a local arm of the international consumer finance provider has revealed that about 46% of Indians have had to borrow to maintain their household finances based on a survey.
About 1000 people across seven cities responded to the survey.
The report says, “The impact of the pay cuts or delays was the next big reason why most borrowers resorted to borrowing.”
Three Main Reasons Why 46% of Indians Had To Borrow Money
Let’s look at the three main reasons for people borrowing money:
Pay cuts: The biggest reason why 46% of Indians took loans to run their households was pay cuts and/or delay in salary. Since the normal cash flow suddenly disrupted, the salaried, middle-class Indian had no other option, but to take a loan for feeding their family.
EMI: Paying EMIs for existing loans was 2nd biggest reason, why most of the Indians took loans during the pandemic. And still taking loans. Since most of them already had an existing loan, they were required to pay the EMIs. Although the Govt announced a loan moratorium, as per various researches, it proved to be an expensive affair. Once the loan moratorium period ended, the borrower was supposed to pay the entire pending EMIs, along with interest. Hence, EMIs for loans was an important reason for taking loans.
As per the report, “27 per cent of respondents cited repayment of their monthly instalments from the earlier loan as the second-biggest reason behind borrowing.”
Job Loss: After pay cuts and EMIs, the biggest reason for most of the Indians to take loans was job loss. Since companies were forced to fire employees due to lack of new projects, it severely impacted the middle class Indian, who is dependent on salary for running their household.
The report states that 14% of Indians borrowed money because of the loss of jobs.